Minutes of the Board of Regents of Stephen F. Austin State University. 2010, Volume No. 258

Stephen F. Austin
State University
Minutes of the
Board of Regents
Nacogdoches, Texas
February 26,2010
Meeting 258
TABLE OF CONTENTS
BOARD MINUTES FOR FEBRUARY 26,2010
MEETING 258
Page
Board Order 10-19
Approval of Changes to Licensing Agreement for Biotechnology Research
with Quest Biologicals, LLC .2
Board Order 10-20
Approval of Resolution Authorizing the Refunding of the Outstanding SFA
1998 Tuition Revenue Bond Issue and Sale of the Texas Public Finance Authority
Stephen F. Austin State University Revenue Financing System Revenue Refunding
Bonds 2
Board Order 10-21
Designated Tuition Increase for 2010-2011 3
Board Order 10-22
Course Fees and Lab Fees for 2010-2011 3
Board Order 10-23
FY2011 Room and Board Rates 3
Appendices
Appendix 1 - Amended & Restated License Agreement between Stephen F. Austin State
University and Quest Biologicals, LLC
Appendix 2 - Resolution Authorizing the Refunding of the Outstanding SFA 1998
Tuition Revenue Bond Issue and Sale of the Texas Public Finance
Authority Stephen F. Austin State University Revenue Financing System
Revenue Refunding Bonds
Appendix 3 - Proposed Course Fees and Lab Fees for FY2011
Appendix 4 - Room and Board Rates for FY2011
Stephen F. Austin State University
Minutes of the Meeting of the Board of Regents
Nacogdoches, Texas
February 26,2010
Austin Building 307
Meeting 258
A special called meeting of the Board of Regents was called to order in open session at
2:00 p.m., Friday, February 26, 2010, by Chair James Thompson.
PRESENT:
Board Members: Mr. James Thompson, Chair
Mr. Carlos Amaral
Mr. Richard Boyer
Dr. Scott Coleman
Mr. James Dickerson
Ms. Valerie Ertz
Mr. Steve McCarty
Ms. Morgan Tomberlain
Mr. Melvin White
President: Dr. Baker Pattillo
Vice-Presidents: Dr. Richard Berry
Mr. Danny Gallant
Mr. Steve Westbrook
Staff Attorney: Mr. Damon Derrick
Other SFA administrators, staff, and visitors
Regent Bob Garrett was unable to attend because of a death in his family.
The chair called for an executive session at 2:05 p.m. to consider the following item:
Consultation with Attorney Regarding Legal Advice (Texas Government Code, Section
551.071)
The executive session ended at 2:10 p.m.
The Finance Audit Committee convened at 2:10p.m. and adjourned at 2:30p.m.
-1-
The board reconvened as a committee of the whole in open session at 2:30 p.m. and
considered the following financial affairs recommendations from the Finance Audit
Committee:
Board Order 10-19
Upon motion by Regent Dickerson, seconded by Regent White, with all members voting
aye, the following item was approved:
CONSIDERATION OF CHANGES TO LICENSE AGREEMENT FOR
BIOTECHNOLOGY RESEARCH WITH QUEST BIOLOGICALS, LLC
Whereas, the board considered the following: The university entered into a license
agreement effective October 24, 2002 granting an exclusive license to manufacture, have
manufactured, sell or otherwise commercialize intellectual property developed in part by
Dr. Bea Clack, Associate Professor of Biotechnology. This license agreement has become
antiquated and requires revisiting in order to assist the licensee in its efforts to assign the
agreement upon university consent. The university's Intellectual Property Policy states:
"Agreements which grant a third party the right to make, use, or sell a patented invention,
invention know-how, or trade secret that has been disclosed and assigned to, or is
otherwise owned by, the university shall require approval by the Board of Regents."
Therefore, is was ordered that the president was authorized to sign any contracts or
agreements amending or superseding the above mentioned licensing agreement and any
subsequent assignment, as reviewed and approved by the Office of the General Counsel,
and attached as Appendix 1.
Board Order 10-20
Upon motion by Regent Amaral, seconded by Regent Ertz, with all members voting aye,
the following item was approved:
CONSIDERATION OF RESOLUTION AUTHORIZING THE REFUNDING OF THE
OUTSTANDING SFA 1998 TUITION REVENUE BOND ISSUE AND SALE OF THE
TEXAS PUBLIC FINANCE AUTHORITY STEPHEN F. AUSTIN STATE
UNIVERSITY REVENUE FINANCING SYSTEM REVENUE REFUNDING BONDS
Whereas, the board considered the following: Stephen F. Austin State University is in
the process of issuing $35 million of revenue bonds to finance the construction of the
Freshman Residence Hall/Success Center and parking garage. In association with that
issue, current market conditions provide the opportunity to refund its outstanding 1998
tuition revenue bonds. If favorable market conditions prevail, refunding can save the state
of Texas debt service costs for the remaining life of the 1998 tuition revenue bond issue.
The resolution in Appendix 2 authorizes the refunding of the outstanding 1998 tuition
revenue bonds and sale of the Texas Public Authority Stephen F. Austin State University
Revenue Financing System Revenue Refunding Bonds.
-2-
Therefore, it was ordered that the resolution was approved as presented in Appendix 2,
authorizing the refunding of the outstanding 1998 tuition revenue bond issue and sale of
the Texas Public Finance Authority Stephen F. Austin State University Revenue
Financing System Revenue Refunding Bonds.
Board Order 10-21
Upon motion by Regent Ertz, seconded by Regent White, with Regents Coleman,
Dickerson, Ertz, McCarty, and White voting aye, Regents Amaral and Boyer voting nay,
the following item was approved:
DESIGNATED TUITION INCREASE FOR 2010-2011
Whereas, the board considered the following: Stephen F. Austin State University
currently assesses $111 per semester credit hour in designated tuition. Designated tuition
costs to a student do not increase beyond a 16 semester credit load.
Therefore, it was ordered that designated tuition be increased to $119.85 per semester
credit hour for fiscal year 2010-2011.
Board Order 10-22
Upon motion by Regent Ertz, seconded by Regent White, with Regents Boyer, Coleman,
Dickerson, Ertz, McCarty, and White voting aye, Regent Amaral voting nay, the
following item was approved:
COURSE FEES AND LAB FEES FOR 2010-2011
Whereas, the board considered the following: Course and lab fees provide instructional
departments with funds to support the actual cost of consumable supplies, service, and
travel related to specific courses. Course and lab fees are allocated to instructional
departments for expenditures related to course delivery.
Therefore, it was ordered that the schedule of course fees and lab fees for the 2010-
2011 fiscal year shown in Appendix 3 was adopted. This fee schedule will begin with the
fall 2010 semester.
Board Order 10-23
Upon motion by Regent Ertz, seconded by Regent Amaral, with all regents voting aye,
the following item was approved:
FY2011 ROOM AND BOARD RATES
Whereas, the board considered the following: Projected housing and food service
operating costs support the need to increase the room and board rates for the 2010 - 2011
academic year.
-3-
Pursuant to the provisions within the food service contract, the administration and
ARAMARK have negotiated a rate increase of 2.85% for the provision of board plan
food service during the 2011 fiscal year. The university contract uses the percentage
increase in the Food and Beverage element of the Consumer Price Index published by the
Bureau of Labor Statistics, U.S. Department of Labor, for urban consumers ("CPI-U") in
the South as a benchmark for the rate increase considered. This CPI element was 3.6%
for the past 12 months; however university negotiations yielded the smaller increase.
The proposed room and board rates for FY2011 are presented in Appendix 4. The
average increase in proposed room rates is 5% while the proposed increase in meal plan
rates is 3.35%.
The revised rates will become effective in the fall semester of 2010.
Therefore, it was ordered that the negotiated 2.85% ARAMARK increase and the
proposed room and board rates for FY2011 in accordance with the schedule presented in
Appendix 4 were approved.
The meeting was adjourned at 2:48 p.m.
-4-
Appendix 1
AMENDED & RESTATED LICENSE AGREEMENT
This Amended & Restated License Agreement ("Agreement") is between the Stephen F.
Austin State University ("University"), an agency entity of the State of Texas with its principal
administrative office in Nacogdoches, Texas, and Quest Biologicals, LLC. (formerly Quest
Biologicals, Ltd.), a Texas Limited Liability Company, having its principal administrative office
located at 1214 Williamsburg, Nacogdoches, Texas ("Licensee"). Certain capitalized terms used
herein are defined in Section 2 hereof.
Recitals
A. University owns certain Technology Rights related to the Licensed Subject
Matter, which have been developed at the University pursuant to that certain Stephen F. Austin
State University Educational Research Agreement and a Second Extension of such Research
Agreement {hereinafter the Research Agreement and the Second Extension shall be collectively
referred to as the "Research Agreement") between the parties hereto originally effective
September 1,2000.
B. The parties desire to have the Licensed Subject Matter further developed and used
for the benefit of Licensee and the University, and simultaneously with the execution of this
Agreement by the parties, Licensee and University have entered into a Second Extension of
Educational Research Agreement extending and supplementing the above Research Agreement
under which Licensee will continue to fund further research and development by the University
of the Licensed Subject Matter as provided therein. Licensee and University entered into a
License Agreement ("License Agreement") effective October 24, 2002 to provide certain rights
and benefits to Licensee for the practice of the licensed subject matter, with particular regards to
a Biotin based product.
C. The parties desire that License Agreement be amended and restated to further
define and clarify the relationship and duties between the parties, and to assist Licensee in any
subsequent assignment upon University consent. Licensee obtain a license from University to
practice the Licensed Subject Matter.
Terms and Conditions
NOW, THEREFORE, in consideration of the mutual covenants and promises herein
contained, the parties agree as follows:
1. Effective Date
This Agreement is effective October 2<\February 26, 207002 ("Effective Date")
2. Definitions
As used in this Agreement, the following terms have the meanings indicated:
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Appendix 1
2.1 "Affiliates" means any business entity more than 50% owned by Licensee, any
business entity which owns more than 50% of Licensee, or any business entity that is more than
50% owned by a business entity that owns more than 50% of Licensee.
2.2 "Licensed Field" means the—determination and development of optimum
expression and production of Biotin , Riboflavin and Vitamin B12 and any other compounds
from the research under the Research Agreement as it may bo amended, extended or
supplemented from time to time, and the development of commercially feasible manufacturing
techniques for such productBiotin.
2.3 "Licensed Product" means any product sold by Licensee and its Affiliates and
sublicensees utilizing the Licensed Subject Matter pursuant to this Agreement.
2.4 "Licensed Subject Matter" means inventions and discoveries covered by Patent
Rights and/or Technology Rights within the Licensed Field.
2.5 "Licensed Territory" means the world.
2.6 "Net Sales" means the gross revenues received by Licensee and its affiliates from
Sales of Licensed Products less sales and/or use taxes actually paid, import and/or export duties
actually paid, outbound transportation costs prepaid or allowed, and amounts allowed or credited
due to returns (not to exceed the original billing or invoice amount).
2.7 "Patent Rights" means University's rights in information or discoveries covered
by United States Patent No. 7,423,136patents and/or patent applications, whether domestic or
foreign, and all divisions, continuations, continuations-in-part, reissues, reexaminations or
extensions thereof, and any letters patent that issue thereon, which are for inventions in the
Licensed Field.
or Sold" means the transfer or disposition of a Licensed Product covered by
Patent Rights and/or Technology Rights for value to a party other than Licensee and its
Affiliates.
2.^Technical Information" means any know how, technical information, process, procedure,
protocol, technique, design, drawing, data, devices, models, layouts, quality standards,
specifications, manuals, process of manufacture, manufacturing techniques, test systems
specifications, simulated designs, and all other data relating to the use, manufacture, marketing,
maintenance, and sale of products in the Licensed Field created at the University which are not
included in the Patent Rights.
3rM2.8 "Technology Rights" means all rights to the Technical Information.
3. Certain Representations & Covenants
3.1 University represents and warrants that (i) it is the owner of the entire right, title,
and interest in and to Licensed Subject Matter, (ii) it has the sole right to grant licenses for the
use thereof, aftd-(iii) it has not granted licenses therefor to any other person or entity, and (iv)
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Appendix 1
will not license the Licensed Subject Matter to any other person or entity during the term of this
Agreement.
3.2 Licensee understands and acknowledges that University, by this Agreement,
makes no representation as to the operability or fitness for any use, safety, efficacy, ability to
obtain regulatory approval, patentability, and/or breadth of the Licensed Subject Matter.
3.3 Licensee, by execution hereof, acknowledges, covenants and agrees that (i) it has
conducted sufficient due diligence with respect to all items and issues pertaining to this
Agreement; and (ii) Licensee has adequate knowledge and expertise, or has utilized
knowledgeable and expert consultants, to adequately conduct the due diligence, and agrees to
accept all risks inherent herein.
4. License
4.1 University hereby grants to Licensee and its Affiliates a royalty-bearing,
exclusive license under the Licensed Subject Matter to use the Licensed Subject Matter and to
manufacture, have manufactured, sell or otherwise commercialize Licensed Products, and to
sublicense the above rights (subject to providing in any sublicense royalties payable to the
University by sublicensee the same as royalties payable hereunder excepting the provisions of
the last sentence of Section 5.1 below), within the Licensed Territory. Licensee shall reasonably
pursue the commercial production and sales of commercially feasible Licensed Products.
Licensee shall notify the University of any sublicensing agreement and provide a copy thereof to
the University, within thirty (30) days after the execution of any such agreement.
4.2 There shall be no subsequent research conducted by University Regarding
subsequent research in the Licensed Field unless such research is commissioned by Licensee
and/or Licensee's assignees
a.If there is a commercially reasonable basis and objective to justify increased and
continued research in the Licensed Field by University beyond the provisions of
the Research Agreement as it may be amended, extended or supplemented, and
University desires to pursue the same, University shall offer Licensee tho
opportunity to fund such research under an amendment to the Research
Agreement or a new research agreement between such parties.
b.If Licensee wishes not to fund any such additional research, then University may agree
with one or more other parties to fund such additional research and grant a license
to commercially exploit any Inventions (as defined in the Research Agreement)
under said additional research, and any such Invention may be licensed by the
University, and it shall be joined in by Licensee hereunder, conditional on the
following.
c.The parties acknowledge and agree that to the extent that Licensee has funded the initial
research in the Licensed Field upon which any additional research is based,
Licensee shall be reasonably compensated for such funding by any new licensees
of any Invention from the additional research. Thus, University hereby agrees to
include in any License granted for any such Invention a royalty payable to
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Appendix 1
Licensee in the same amount and on the same terms as any royalty payable to tho
University. Licensee agrees to join into any such license agreement to verify tho
licensee's rights thereunder as well as to verify Licensee's rights.
d.Likewise, for any license granted to other parties which sponsor the research for
products in the Licensed Field where the Licensee in this contract did not fund the
research in whole or in part, and for which the new research and products are not
based in any way upon the research funded by Licensee, then Licensee will not bo
entitled to any royalties or remuneration under such independent license. Tho
Licensee to this agreement agrees to execute appropriate documentation necessary
to release the University from this Agreement for any research not funded by
Licensee and not based on the research which has been funded by Licensee. The
parties agree to jointly pay, in equal portions, for a third party scientist to review
and advise whether such subsequent research was in any way related to research
funded by Licensee before such a release is executed.
4.3 University further grants and assigns to Licensee all rights and causes of action at
law or in equity on account of past, present and fiiture authorized or unauthorized use of the
Licensed Subject Matter by others and for infringement by others of said Licensed Subject
Matter and like protection, including, but not limited to, patent prosecution, interference
proceedings, actions for infringement, opposition proceedings, cancellation proceedings, priority
contests, actions for unfair competition, dilution, license breach, customs proceedings, and
royalty collection proceedings.
4.4 This grant is subject to the payment by Licensee to University of all consideration
as provided herein and in any related research agreement between Licensee and the University,
and is further subject to rights retained by University to:
a. Use the Licensed Subject Matter subject to the terms of Section 10 and any
related research agreement between Licensee and the University, for research,
teaching and other educationally-related purposes; and
b. Publish the general scientific findings from research related to the Licensed
Subject Matter subject to the terms of Section 10 and any related research
agreement between Licensee and the University.
5. Royalty Payments
5.1 In consideration of rights granted by University to Licensee under this
Agreement, Licensee will pay University a license fee of $1^000 on the Effective Date hereof
and a royalty equal to five percent (5%) of Net Sales of Licensed Products by Licensee and its
Affiliates in accordance with the following. This royalty shall begin to accrue and be payable on
the Net Sales after the earlier to occur of (1) Licensee and its Affiliates having aggregate,
cumulative Net Sales in the amount of $2,000,000, or (2) the expiration of two years after the
first date of a Sale of any Licensed Product.
5.2 Licensee shall notify University in writing of the first date of a Sale of any
Licensed Product within thirty (30) days of such Sale. Within 30 days after each anniversary
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Appendix 1
date of such date of first Sale, Licensee will deliver to University a true and accurate written
report, even if no payments are due University, giving the Sales and Net Sales of each Licensed
Product and other relevant information about the business conducted by Licensee and its
Affiliates during the preceding year under this Agreement as are pertinent to calculating the
royalty hereunder. Any royalties that accrued for Net Sales during the preceding year shall be
paid along with the delivery of such report within thirty (30) days after each such anniversary.
5.3 During the term of this Agreement and for five years thereafter, Licensee and its
Affiliates agree to keep complete and accurate records of Sales and Net Sales of Licensed
Products under the license granted in this Agreement in sufficient detail to enable the royalties
payable hereunder to be verified. Licensee agrees to permit the University or its representatives,
at University's expense, to periodically, but not more than once per year, examine and/or audit its
books, ledgers, and records during regular business hours and after not less than fourteen (14)
days written notice, for the purpose of and to the extent necessary to verify any report required
under this Agreement. If the amounts due to University are determined to have been underpaid
by more than five percent (5%) of the amount paid, Licensee will pay accrued interest on
underpaid amounts for the time underpaid at 7% per annum.
5.4 On or before each anniversary of the Effective Date, Licensee will deliver to
University a written report as to Licensee's and its Affiliates' efforts and accomplishments during
the preceding year in commercializing the Licensed Subject Matter in the Licensed Territory.
5.5 All amounts payable hereunder by Licensee must be paid in United States funds
without deductions for taxes, assessments, fees, or charges of any kind unless expressly allowed
hereunder. Checks must be made payable to Stephen F. Austin State University and sent to the
University address noted in Paragraph 14.2. Conversions of amounts due to the University
hereunder from foreign currency amounts to United States Dollars shall be at the prevailing rate
for bank cable transfers in the New York City foreign exchange market as quoted by J.P.
Morgan/Chase Bank for the last day of the annual period on which royalties are paid.
6. Patents
6.1 Licensee shall reasonably pursue, prosecute and maintain at its own expense U.S.
Patent Rights for all parts of the Licensed Subject Matter that are patentable and have reasonable
commercialization prospects, which Patent Rights, shall be in the name of and owned by the
University. Licensee shall also pursue patent prosecutions for corresponding non-domestic
applications, also at its own expense in jurisdictions where reasonable commercialization of the
Licensed Subject Matter is to be pursued by Licensee, which Patent Rights shall be in the name
of and owned by the University. University shall cooperate with Licensee as reasonable and
appropriate to pursue the above Patent Rights.
7. Patent Marking and Infringement by Third Parties
7.1 To the extent Licensee can reasonably mark a product and packaging and
documentation manufactured or sold by it under this Agreement, Licensee must permanently and
legibly mark all products and documentation manufactured or sold by it under this Agreement
with a patent notice as may be permitted or required under Title 35, United States Code.
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Appendix 1
7.2 Licensee, at its expense, shall may enforce any patent exclusively licensed
hereunder against infringement by third parties and it is entitled to retain recovery from such
enforcement, which includes, but is not limited to, lawsuits and/or settlement negotiations,
provided that -Licensee shall pay University the royalty hereunder on any monetary recovery it
receives net of its reasonable out-of-pocket costs for such recovery. If Licensee does not file suit
against a substantial infringer of Patent Rights within 6 months of knowledge thereof, then
University may enforce any patent licensed hereunder on behalf of itself and Licensee.
University shall retain recoveries from such enforcement in an amount to pay its reasonable out-of-
pocket costs of such enforcement plus its royalty on such recovery hereunder net of its
reasonable out-of-pocket costs for such recovery, and remit 50% of the balance of such recovery
to the Licensee.
7.3 In any infringement suit or dispute, the Licensee and University agree to
cooperate fully with each other in all reasonable respects. At the request and expense of the
party bringing suit, the other party will permit access to all relevant personnel, records, papers,
information, samples, specimens, etc., during regular business hours.
8. Indemnification and Insurance
8.1 Licensee agrees to hold harmless and indemnify University, its Regents, officers,
employees and agents from and against any claims, demands, or causes of action whatsoever,
including without limitation, those arising on account of any injury or death of persons -or
damage to property caused by, or arising out of, or resulting from, the exercise or practice of the
license granted hereunder by Licensee, its Affiliates or their officers, employees, agents or
representatives.
8.2 Licensee represents and warrants that it is covered by comprehensive general
liability insurance in the amount of $1,000,000, and shall maintain such insurance during the
term of this Agreement and for the period of time required below. Licensee and its affiliates and
sublicensees shall maintain on an ongoing basis such comprehensive general liability insurance
which covers all activities and obligations of the Licensee and its Affiliates and sublicensees per
the terms of the Agreement hereunder.
8.3 Commencing not later than thirty (30) days prior to the first use in humans of a
Licensed Product, and thereafter for the time period required below, Licensee shall obtain and
maintain on an ongoing basis product liability insurance covering Licensed Products.
8.4 Licensee will provide written notice to University at least forty-five (45) days
prior to any cancellation or material change in any required insurance coverage.
8.5 Promptly after the effective date of this Agreement with respect to the
comprehensive general liability coverage, and not later than thirty (30) days prior to the first use
in humans of a Licensee Product with respect to the product liability coverage, Licensee will
provide to University certificates evidencing each such coverage.
8.6 Licensee shall maintain, and require all Affiliates and sublicensees to maintain,
such insurance coverage without interruption during the term of this Agreement, and beyond the
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expiration or termination of this Agreement during the period that any Licensed Product is being
commercially distributed or sold by Licensee, its Affiliates or sublicensees.
9. Use of University and/or Licneensee's Name
Neither jrartyLicensee may net-use the other party's name of University without prior
express written consent.
10. Confidential Information and Publication
10.1 University and Licensee each agree that all information contained in documents
forwarded to one by the other concerning the subject matter of this Agreement (i) are to be
received in strict confidence, (ii) used only for the purposes of this Agreement, and (iii) not
disclosed by the recipient party, its agents or employees without the prior written consent of the
other party, except to the extent that the recipient party can establish competent written proof that
such information:
a. was in the public domain at the time of disclosure;
b. later became part of the public domain through no act or omission of the recipient
party, its employees, agents, successors or assigns;
c. was lawfully disclosed to the recipient party by a third party having the right to
disclose it without obligation of confidentiality;
d. was already known by the recipient party at the time of disclosure as shown by
written records of the recipient party at the time of the disclosure;
e. was independently developed by the recipient without reference to the disclosing
party's information; or
f. is required by law or regulation to be disclosed.
10.2 Each party's obligation of confidence hereunder shall be fulfilled by using at least
the same degree of care with the other party's confidential information as it uses to protect its
own confidential information. This obligation shall exist while this Agreement is in force and for
a period of three years after its termination.
11. Term and Termination
11.1 The period for which this Agreement shall be in effect is from the Effective Date
through the end of the life of all of the patents under the Patent Rights, subject to earlier
termination as provided below.
11.2 Any time after thfee^/zve (3-5) years from the completion of the research under the
extended Research Agreement,Effiecrtve Date, University has the right to terminate this
Agreement if Licensee or its Affiliates has failed to reasonably commercialize at least one
Licensed Product. For this Agreement, "reasonably commercialize" shall mean that Licensee
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and/or its Affiliates and sublicensees have paid to University at least $20,000 in aggregate
royalties for one or more Licensed Products within three (3) years after royalty payments begin
to accrue under Section 5.1 or Licensee has made a payment of at least $20,000 in lieu of a
royalty payment within three (3) years after royalty payments begin to accrue under Section 5.1.
11.3 Subject to the provisions of Paragraph 13.1, this Agreement may also terminate:
a. automatically if Licensee becomes bankrupt or insolvent and/or if the business of
Licensee is placed in the hands of a receiver for debt relief or trustee for a trust
created for debt relief, whether by voluntary act of Licensee or otherwise; or
b. upon the expiration of 60 days after delivery to Licensee of written notice from
the University if Licensee breaches or defaults on its obligation to make payments
or reports in accordance with the terms of Section 5 hereunder, unless, before the
end of the 60 day period, Licensee has cured the default or breach by the
University's receipt of the required report or payment; or
c. upon the expiration of 90 days after delivery of written notice from University if
Licensee breaches or defaults on any other obligation, unless, before the end of
the 90-day period, Licensee has cured the default or breach; or
d. at any time upon written notice from Licensee to University stating that it has
determined that the rights it has received under this Agreement constitute an
infringement on the rights of others to a material portion of the Licensed Subject
Matter; or
e. at any time upon 90 days written notice from Licensee stating that it has
determined that the rights it has received under this Agreement are insufficient to
protect or continue to protect a Licensed Product; or
f. at any time by mutual written agreement between Licensee and University,
subject to any terms herein which survive termination.
g. upon the expiration of 60 days after delivery to University of written notice from
the Licensee if University breaches or defaults on its obligations under this
Agreement, unless, before the end of the 60 day period, University has cured the
default or breach.
11.4 If this Agreement is terminated:
a. nothing herein will be construed to release either party of any obligation matured
prior to the effective date of the termination;
b. after the effective date of the termination, Licensee may sell all Licensed Products
and parts thereof it has on hand at the date of termination, if it pays earned
royalties thereon according to the terms of Article 5; and
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c. the parties hereto will continue to be bound by the provisions of Articles 8
(Indemnification and Insurance), 9 (Use of University's Name), 10 (Confidential
Information and Publication), 13 (Alternate Dispute Resolution) and 14 (General)
of this Agreement.
12. Assignment
12.1 Neither party may assign this Agreement without the prior written consent of the
other party, except that either party may, without the consent of the other, assign the Agreement
to a purchaser of all or substantially all of that party's assets used in connection with performing
this Agreement, provided the assigning party guarantees the performance of and causes the
assignee to assume in writing all obligations of the assignor under this Agreement. The rights
and obligations of this Agreement shall bind and benefit any successors or assigns of the
parties.Except to an assignee of the entire business of Licensee associated with the Licensed
Subject Matter who expressly assumes the obligations of Licensee under this Agreement; this
Agreement may not be assigned to any entity or person not an Affiliate of Licensee without the
prior written consent of University. This Agreement may be assigned at any time by Licensee to
an Affiliate of Licensee.
13. Alternate Dispute Resolution
13.1 To the extent that Chapter 2260, Texas Government Code, is applicable to this
Agreement Agreement and is not preempted by other applicable law, the dispute resolution
process provided for in Chapter 2260 and the related rules adopted by the Texas Attorney
General pursuant to Chapter 2260, shall be used by University and the Licensee to attempt to
resolve any claim for breach of contract made by Licensee that cannot be resolved in the
ordinary course of business. The Vice President for Business AffairsFinance and Administration
of University shall examine Licensee's claim and any counterclaim and negotiate with Licensee
in an effort to resolve such claims. The parties hereto specifically agree that (i) neither the
occurrence of an event giving rise to a breach of contract claim nor the pendency of a claim
constitute grounds for the suspension of performance by Licensee; (ii) neither the issuance of this
AgreementKgxQQmQnX by University nor any other conduct, action or inaction of any
representative of University relating to this Agreement Agreement constitutes or is intended to
constitute a waiver of University's or the state's sovereign immunity to suit; and (iii) University
has not waived its right to seek redress in the courts.
14. General
14.1 This Agreement constitutes the entire and only agreement between the parties for
the license hereunder, and all other prior negotiations, representations, agreements, and
understandings are superseded hereby. No agreements altering or supplementing the terms
hereof may be made except by a written document signed by both parties.
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14.2 Any notice or report required by, or appropriate in connection with, this
Agreement must be given by prepaid, first class, certified mail, return receipt requested,
addressed in the case of University to:
Vice President for Business AffairsFinance and Administration
Stephen F. Austin State University
ftP.-O.Box 6108
Nacogdoches, Texas 75962-6108
Fax: 936-468-7027
Telephone: 936-468-2203
With a copy to:
General Counsel
Stephen F. Austin State University
ftP.-O. BO^ox 13065
Nacogdoches, Texas 75962-3065
Fax: 936-468-3875
Telephone: 936-468-4305
and in the case of Licensee to:
Quest Biologicals, LLCtd.
1214 Williamsburg
Nacogdoches, Texas 75961
Attention: Bradley Reynolds
Fax: 936-560-0157
Telephone: 936-560-0003
or such other addresses as may be given from time to time under the terms of this notice
provision.
14.3 Licensee must comply with all applicable federal, state and local laws and
regulations in connection with its activities pursuant to this Agreement.
14.4 This Agreement will be construed and enforced in accordance with the laws of the
United States of America and of the State of Texas.
14.5 Failure of a party to enforce a right under this Agreement will not act as a waiver
of that right or the ability to later assert that right relative to the particular situation involved.
14.6 Headings are included herein for convenience only and shall not be used to
construe this Agreement.
14.7 If any part of this Agreement is for any reason found to be unenforceable, all
other parts nevertheless remain enforceable.
Page 10 of 119
Appendix 1
IN WITNESS WHEREOF, parties hereto have caused their duly authorized
representatives to execute this Agreement.
UNIVERSITY LICENSEE
By__ By
Name Name
Title . Title_
Date__ Date
| 0382848.03
Page 11 of
RESOLUTION
AUTHORIZING THE SALE OF THE TEXAS PUBLIC
FINANCE AUTHORITY STEPHEN F. AUSTIN STATE
UNIVERSITY REVENUE FINANCING SYSTEM REVENUE
BONDS; AUTHORIZING ACTIONS BY THE TEXAS
PUBLIC FINANCE AUTHORITY AND
REPRESENTATIVES THEREOF IN CONNECTION WITH
THE SALE AND DELIVERY OF SAID BONDS; AND
RESOLVING OTHER MATTERS RELATED THERETO
ADOPTED MARCH 4, 2010
HOU:2993847.1
RESOLUTION
AUTHORIZING THE SALE OF THE TEXAS
PUBLIC FINANCE AUTHORITY STEPHEN F.
AUSTIN STATE UNIVERSITY REVENUE
FINANCING SYSTEM REVENUE BONDS;
AUTHORIZING ACTIONS BY THE TEXAS PUBLIC
FINANCE AUTHORITY AND REPRESENTATIVES
THEREOF IN CONNECTION WITH THE SALE
AND DELIVERY OF SAID BONDS; AND
RESOLVING OTHER MATTERS RELATED
THERETO
TABLE OF CONTENTS
Page
PREAMBLE 1
Section 1. REVENUE FINANCING SYSTEM AND ISSUANCE OF PARITY
OBLIGATIONS 4
Section 2. SECURITY AND PLEDGE 4
Section 3. COVENANTS RELATING TO PLEDGED REVENUES 5
Section 4. GENERAL COVENANTS 6
Section 5. ISSUANCE OF ADDITIONAL OBLIGATIONS 9
Section 6. DISPOSITION OF ASSETS ATTRIBUTABLE TO FINANCING SYSTEM
PARTICIPANTS 10
Section 7. COMBINATION, DIVISION, RELEASE AND ADMISSION OF NEW
INSTITUTIONS UNDER THE FINANCING SYSTEM 10
Section 8. WAIVER OF CERTAIN COVENANTS 11
Section 9. AMOUNT, PURPOSE, AND DESIGNATION OF THE BONDS 12
Section 10. DATE, DENOMINATIONS, NUMBERS, DELEGATION TO THE PRICING
COMMITTEE AND USE OF PROCEEDS 12
Section 11. INTEREST 15
Section 12. REGISTRATION, TRANSFER, AND EXCHANGE; AUTHENTICATION;
BOOK-ENTRY-ONLY SYSTEM 15
Section 13. FORM OF BONDS 20
HOU:2993847.1
Section 14. INDIVIDUALS NOT LIABLE 20
Section 15. SECURITY FOR THE BONDS 20
Section 16. PAYMENTS 20
Section 17. DAMAGED, MUTILATED, LOST, STOLEN, OR DESTROYED BONDS .... 21
Section 18. REMEDIES.... 22
Section 19. DEFEASANCE OF OBLIGATIONS 22
Section 20. AMENDMENT OF RESOLUTION 23
Section 21. COVENANTS REGARDING TAX-EXEMPTION 26
Section 22. REFUNDING OF REFUNDED BONDS 29
Section 23. SALE OF THE BONDS 29
Section 24. COMPLIANCE WITH RULE 15c2-12 29
Section 25. RESOLUTION TO CONSTITUTE A CONTRACT; EQUAL SECURITY 32
Section 26. SEVERABILITY OF INVALID PROVISIONS 32
Section 27. PAYMENT AND PERFORMANCE ON BUSINESS DAYS 32
Section 28. LIMITATION OF BENEFITS WITH RESPECT TO THE RESOLUTION 33
Section 29. CUSTODY, APPROVAL, BOND COUNSEL'S OPINION, CUSIP NUMBERS,
PREAMBLE AND INSURANCE 33
Section 30. FURTHER PROCEDURES 33
Section 31. REPEAL OF CONFLICTING RESOLUTIONS 33
Section 32. REFERENCES TO AUTHORITY 34
Section 33. PERFECTION OF PLEDGE 34
Section 34. BOND INSURANCE 34
Section 35. PUBLIC NOTICE 34
Section 36. REDEMPTION OF REFUNDED BONDS 34
HOU.2993847.1
SCHEDULE I
EXHIBIT A DEFINITIONS A-l
EXHIBIT B FORM OF BONDS B-l
EXHIBIT C DESCRIPTION OF ANNUAL FINANCIAL INFORMATION C-l
in
HOU:2993847.1
RESOLUTION
AUTHORIZING THE SALE OF THE TEXAS PUBLIC
FINANCE AUTHORITY STEPHEN F. AUSTIN STATE
UNIVERSITY REVENUE FINANCING SYSTEM REVENUE
BONDS; AUTHORIZING ACTIONS BY THE TEXAS
PUBLIC FINANCE AUTHORITY AND
REPRESENTATIVES THEREOF IN CONNECTION WITH
THE SALE AND DELIVERY OF SAID BONDS; AND
RESOLVING OTHER MATTERS RELATED THERETO
WHEREAS, the Board of Regents (the "Board") of Stephen F. Austin State University
(the "University") heretofore authorized, issued, and delivered various series of bonds
hereinafter defined as the, "Outstanding Revenue Bonds"; and
WHEREAS, in order to reduce costs, increase borrowing capacity, provide additional
security to the credit markets, and provide the Board with greater financial flexibility, the Board
deemed it necessary and desirable to establish a revenue financing program for revenue
supported indebtedness to provide funds to acquire, purchase, construct, improve, renovate,
enlarge or equip property, buildings, structures, facilities, roads, or related infrastructure at the
University, as well as any institution, branch or entity hereafter placed under the control and
governance of the Board, to the extent permitted by Chapter 55, Texas Education Code,
including specifically, but not by way of limitation, Section 55.02 thereof, and
WHEREAS, the Texas Public Finance Authority (the "Authority") is a public authority
and body politic and corporate duly established and existing under the laws of the State of Texas,
including particularly Chapter 1232, Texas Government Code (the successor provision to
Article 60Id, Texas Revised Civil Statutes, as amended, and hereafter referred to as the "TPFA
Act"); and
WHEREAS, Section 1232.101 of the TPFA Act recites that the Authority has the
exclusive authority to act on behalf of the University in issuing certain bonds on its behalf; and
WHEREAS, Section 55.13(c), Texas Education Code, provides that the Authority shall
exercise the authority of the Board to issue bonds on behalf of the University, in the manner
provided by Subchapter B of Chapter 55, Texas Education Code; and
WHEREAS, Section 55.13, Texas Education Code, recites that the Authority has all the
rights and duties granted or assigned to and is subject to the same conditions as the Board under
Chapter 55, Texas Education Code; and
WHEREAS, the resolution entitled "RESOLUTION AUTHORIZING THE SALE
OF THE BOARD OF REGENTS OF STEPHEN F. AUSTIN STATE UNIVERSITY
REVENUE FINANCING SYSTEM, TEXAS PUBLIC FINANCE AUTHORITY
REVENUE BONDS, SERIES 1998, IN AN AGGREGATE PRINCIPAL AMOUNT NOT
TO EXCEED $6 MILLION; AUTHORIZING ACTIONS BY THE TEXAS PUBLIC
FINANCE AUTHORITY, STEPHEN F. AUSTIN STATE UNIVERSITY AND
REPRESENTATIVES THEREOF IN CONNECTION WITH THE SALE AND
HOU:2993847.1
DELIVERY OF SAID BONDS; AND RESOLVING OTHER MATTERS RELATED
THERETO" (the "Underlying Resolution") was adopted by the Board on July 14, 1998 and by
the Authority on August 12, 1998; and
WHEREAS, the Underlying Resolution established the Stephen F. Austin State
University Revenue Financing System for the purpose of providing a financing structure for
revenue supported indebtedness at the University; and
WHEREAS, pursuant to the terms of the Underlying Resolution, the Authority delivered
its Board of Regents of Stephen F. Austin State University Revenue Financing System, Texas
Public Finance Authority Revenue Bonds, Series 1998, in the aggregate principal amount of
$6,000,000 (the "Series 1998 Bonds"); and
WHEREAS, pursuant to the terms of resolutions adopted in compliance with the
requirements of the Underlying Resolution by the Board and by the Authority, the Authority
delivered multiple series of its Board of Regents of Stephen F. Austin State University Revenue
Financing System, Texas Public Finance Authority Revenue Bonds, Series 2000, Board of
Regents of Stephen F. Austin State University Revenue Financing System, Texas Public Finance
Authority Revenue Bonds, Series 2002, Board of Regents of Stephen F. Austin State University
Revenue Financing System, Texas Public Finance Authority Revenue Bonds, Series 2002A,
Board of Regents of Stephen F. Austin State University Revenue Financing System, Texas
Public Finance Authority Revenue Bonds, Series 2004, Board of Regents of Stephen F. Austin
State University Revenue Financing System, Texas Public Finance Authority Revenue Bonds,
Series 2004A, Board of Regents of Stephen F. Austin State University Revenue Financing
System, Texas Public Finance Authority Revenue Bonds, Series 2005, Board of Regents of
Stephen F Austin State University Revenue Financing System, Texas Public Finance Authority
Revenue Bonds, Series 2005A, Board of Regents of Stephen F. Austin State University Revenue
Financing System, Texas Public Finance Authority Revenue Bonds, Series 2008 and Board of
Regents of Stephen F. Austin State University Revenue Financing System, Texas Public Finance
Authority Revenue Bonds, Series 2009 (the "Series 2000 Bonds," the "Series 2002 Bonds," the
"Series 2002A Bonds," the "Series 2004 Bonds," the "Series 2004A Bonds," the Series 2005
Bonds," the "Series 2005A Bonds," the "Series 2008 Bonds," the "Series 2009 Bonds" and
collectively with the Series 1998 Bonds, the "Previously Issued Parity Obligations");
WHEREAS, the Previously Issued Parity Obligations were secured by a lien on and
pledge of the "Pledged Revenues" (as defined in the Underlying Resolution), which lien and
pledge were made subject to the lien on and pledge of the "Prior Encumbered Revenues" (as
defined in the Underlying Resolution), securing the Outstanding Revenue Bonds; and
WHEREAS, the Underlying Resolution permits the Authority, at the request of the
Board, to issue "Parity Obligations" secured by a lien on and pledge of the Pledged Revenues on
a parity with the Previously Issued Parity Obligations; and
WHEREAS, the Board has requested that the Authority issue bonds on behalf of the
University, pursuant to the authorization granted to the University by Subchapter B of
Chapter 55 of the Texas Education Code, including specifically Section 55.13 thereof, as Parity
HOU:2993847.1
Obligations under the Underlying Resolution, and further requests that the Authority adopt this
Resolution in furtherance of such objective; and
WHEREAS, the Board has requested that certain of the proceeds of the bonds authorized
to be issued by the Authority under this Resolution be used to refund all or a portion of the
Refundable Bonds (as hereinafter defined) assuming the parameters set forth in Section 10(b)
hereof can be achieved as determined by the Pricing Committee (as hereinafter defined) as set
forth in the Pricing Certificate (as hereinafter defined) (collectively, the "Refunded Bonds"); and
WHEREAS, the Authority, on behalf of the Board, desires to refund the Refunded
Bonds in order to achieve a positive gross debt service savings and a net present value savings of
at least one percent (1.0%) of the principal amount of Refunded Bonds, net of any University
contribution to the refunding; and
WHEREAS, Chapter 1207, Texas Government Code, as amended ("Chapter 1207"),
authorizes the Authority to issue refunding bonds and to deposit the proceeds from the sale
thereof, and any other available funds or resources, directly with either (i) a place of payment
(paying agent) for the Refunded Bonds or (ii) a trust company or commercial bank that is not a
depository of the Authority or the University, and such deposit, if made before such payment
dates, shall constitute the making of firm banking and financial arrangements for the discharge
and final payment or redemption of the Refunded Bonds; and
WHEREAS, Chapter 1207 further authorizes the Authority to enter into an escrow
agreement with a place of payment (paying agent) for the Refunded Bonds or a trust company or
commercial bank that is not a depository of the Authority or the University with respect to the
safekeeping, investment, reinvestment, administration and disposition of any such deposit, upon
such terms and conditions as the Authority and such place of deposit may agree, provided that
such deposits may be invested and reinvested only in accordance with applicable law and shall
mature and bear interest payable at such times and in such amounts as will be sufficient to
provide for the scheduled payment or prepayment of the Refunded Bonds; and
WHEREAS, the Authority finds it necessary and advisable to adopt this Resolution, and
further acknowledges that by adopting this Resolution it will be bound by and agrees to follow
the covenants set forth in this Resolution in its capacity of effecting the sale of the bonds
hereinafter described on behalf of the University; and
WHEREAS, the Board finds it necessary and advisable to adopt this Resolution, and
further acknowledges that by adopting this Resolution it will be bound by and agrees to follow
the covenants set forth in this Resolution; and
WHEREAS, the terms used in this Resolution and not otherwise defined shall have the
meaning given in Exhibit "A" to this Resolution attached hereto and made a part hereof,
NOW THEREFORE, BE IT RESOLVED BY THE BOARD OF REGENTS OF
STEPHEN F. AUSTIN STATE UNIVERSITY:
NOW THEREFORE, BE IT RESOLVED BY THE BOARD OF DIRECTORS OF
THE TEXAS PUBLIC FINANCE AUTHORITY:
HOU:2993847.1
Section 1. REVENUE FINANCING SYSTEM AND ISSUANCE OF PARITY
OBLIGATIONS. In the Underlying Resolution, the Stephen F. Austin State University
Revenue Financing System (the "Financing System") has been established, for the purpose of
providing a financing structure for revenue supported indebtedness to provide ftinds to acquire,
purchase, construct, improve, renovate, enlarge or equip property, buildings, structures, facilities!
roads or related infrastructure at the University, as well as at any institution, branch or entity
hereafter placed under the control and governance of the Board, under authority of the pertinent
provisions of the Texas Education Code.
Section 2. SECURITY AND PLEDGE.
(a) Pledge, Subject to the provisions of the resolutions authorizing Prior
Encumbered Obligations, Parity Obligations shall be secured by and payable from a lien
on the Pledged Revenues, and the Board hereby assigns and pledges the Pledged
Revenues to the payment of the principal of, premium, if any, and interest on Parity
Obligations, and the Pledged Revenues are further pledged to the establishment and
maintenance of any ftinds which may be provided to secure the repayment of Parity
Obligations in accordance with this Resolution. The Authority, upon approval and
consent of the Board, may execute and deliver one or more Credit Agreements to
additionally secure Parity Obligations. Credit Agreements may also be secured by a
pledge of Pledged Revenues on a parity with or subordinate to Parity Obligations.
(b) Additional Participants. As provided in Section 7 of this Resolution,
institutions which may hereafter come under the control and governance of the Board
may become Participants in the Financing System and such institutions may, at such
time, have outstanding obligations secured by the Prior Encumbered Revenues and that,
therefore, the lien on and pledge of the Pledged Revenues established pursuant to this
Resolution and effective when such institutions become Participants in the Financing
System will be subject and subordinate only to such institutions' outstanding Prior
Encumbered Obligations.
(c) Restriction on Issuance of Additional Debt on a Parity with Prior
Encumbered Obligations. Except as provided in Section 4(g) and for so long as any
Parity Obligations are Outstanding, no additional bonds, notes, or other obligations may
be issued or incurred by the Board on a parity with any Prior Encumbered Obligations.
(d) Parity Obligations are Special Obligations. All Parity Obligations and
the premium, if any, and the interest thereon shall constitute special obligations of the
Board payable from the Pledged Revenues, and the owners thereof shall never have the
right to demand payment out of funds raised or to be raised by taxation, or from any
source other than the source specified in this Resolution. The obligation of the Board to
pay or cause to be paid the amounts payable under this Resolution out of the Pledged
Revenues shall be absolute, irrevocable, complete, and unconditional, and the amount,
manner, and time of payment of such amounts shall not be decreased, abated, rebated,
set-off, reduced, abrogated, waived, diminished, or otherwise modified in any manner or
to any extent whatsoever, regardless of any right of setoff, recoupment, or counterclaim
that the Board might otherwise have against any owner or any other party and regardless
HOU:2993847.1
of any contingency, force majeure, event, or cause whatsoever and notwithstanding any
circumstance or occurrence that may arise or take place before, during, or after the
issuance of Parity Obligations while any Parity Obligations are Outstanding.
Section 3. COVENANTS RELATING TO PLEDGED REVENUES.
(a) Rate Covenant. In each Fiscal Year, the Board shall establish, charge, and
use its reasonable efforts to collect at each Participant the Pledged Revenues which, if
collected, would be sufficient to meet all financial obligations of the Board for such
Fiscal Year relating to the Financing System including all deposits or payments due on or
with respect to (i) the Prior Encumbered Obligations and (ii) all Outstanding Parity
Obligations.
(b) Tuition. Subject to the provisions of the resolutions authorizing Prior
Encumbered Obligations and to the other provisions of this Resolution, the Board
covenants and agrees to fix, levy, charge and collect at each Participant student tuition
charges required or authorized by law to be imposed on students enrolled at each
Participant (excepting, with respect to each series or issue of Parity Obligations, any
student in a category which, at the time of adoption of a resolution relating to such Parity
Obligations, is exempt bylaw or by the Board from paying such tuition charges). Each
student (excluding those exempt from payment as provided above), enrolled at each
Participant, respectively, at each regular fall and spring semester and at each term of each
summer session, shall pay tuition charges in such amounts, without any limitation
whatsoever, as will be sufficient at all times, together with other legally available funds,
including other Pledged Revenues, to provide the money to make or pay the principal of,
interest on, and other payments or deposits with respect to Outstanding Parity
Obligations when and as required. All changes in the tuition charged students at each
Participant shall be made by resolution of the Board, but such procedure shall not
constitute or be regarded as an amendment of this Resolution, but merely the carrying out
of the provisions and requirements hereof.
(c) Student Center Fees. Subject to the provisions of the resolution
authorizing the Series 2004 Bonds, the Board covenants and agrees to fix, levy, charge
and collect student center fees required or authorized by law to be imposed on students
pursuant to Section 54.520 of the Texas Education Code for the purpose of paying debt
service on the Series 2004 Bonds; provided however, that such student center fees shall
be used only for the purpose of acquiring, constructing, renovating, operating,
maintaining, improving, equipping and financing a university center or additions to the
center.
(d) Student Recreational Sport Fees. Subject to the provisions of the
resolution authorizing the Series 2005A Bonds, the Board covenants and agrees to fix,
levy, charge and collect student recreational sport fees required or authorized by law to
be imposed on students pursuant to Section 54.5201 of the Texas Education Code for the
purpose of paying debt service on the Series 2005 A Bonds; provided however, that such
student recreational sport fees shall be used only to purchase equipment for and to
construct, operate and maintain recreational sports facilities and programs.
HOU:2993847.1
(e) Anticipated Deficit. If the Board determines, for any reason whatsoever,
that there are not anticipated to be legally available funds, including Pledged Revenues,'
sufficient to meet all financial obligations of the Board relating to the Financing System
including the deposits and payments due on or with respect to Outstanding Parity
Obligations as the same mature or come due, or that any Participant in the Financing
System will be unable to pay its Annual Direct Obligation in full, then the Board shall
fix, levy, charge, and collect such rentals, rates, fees, tuition, or other charges at each
Participant in the Financing System with enrolled students, effective at the next
succeeding regular semester or semesters or summer term or terms, in such amounts,
without any limitation whatsoever (other than as provided in subsection (f) below), as
will be at least sufficient to provide, together with other legally available funds, including
Pledged Revenues, the money for making when due all financial obligations of the Board
relating to the Financing System including all payments and deposits due on or with
respect to Outstanding Parity Obligations when and as required by this Resolution.
(f) Economic Effect of Adjustments. Any adjustments in the rate or manner
of charging for any rentals, rates, fees, tuition, or other charges included in Pledged
Revenues at any Participant in the Financing System resulting from an event described in
subsection (e) above will be based upon a certificate and recommendation of the
Designated Financial Officer, delivered to the Board, as to the rates and anticipated
collection of the Pledged Revenues at each Participant in the Financing System (after
taking into account the anticipated effect the proposed adjustments in such rentals, rates,
fees, tuition, or other charges would have on enrollment and the receipt of Pledged
Revenues and other funds at each Participant in the Financing System) which will be
anticipated to result in (i) Pledged Revenues attributable to each Participant being
sufficient (to the extent possible) to satisfy the Annual Obligation of such Participant and
(ii) Pledged Revenues being sufficient, together with other legally available fluids, to
meet all financial obligations of the Board relating to the Financing System including all
deposits and payments due on or with respect to (A) the Prior Encumbered Obligations
and (B) all Outstanding Parity Obligations, when and as required by this Resolution.
(g) Annual Obligation. If, in the judgment of the Board, any Participant in
the Financing System has been or will be unable to satisfy its Annual Obligation, the
Board shall fix, levy, charge, and collect rentals, rates, fees, and charges for goods and
services furnished by such Participant and, with respect to Participants with enrolled
students, tuition, effective at the next succeeding regular semester or semesters or
summer term or terms, in amounts sufficient, without limit (subject to the provisions of
(d) above), together with other legally available funds, including other Pledged Revenues
attributable thereto, to enable it to make its Annual Obligation payments.
(h) Additional Participants. The Board hereby agrees to apply the covenants
hereinabove made to any institution, branch or entity hereinafter placed under the control
and governance of the Board and added as a Participant in the Financing System in
accordance with the provisions of Section 7 hereof.
Section 4. GENERAL COVENANTS. The Board further represents, covenants,
and agrees that while any Parity Obligations or interest thereon is Outstanding:
HOU:2993847.1
(a) Payment of Parity Obligations. On or before each payment date it shall
make available to the Paying Agent for such Parity Obligations or to such other party as
required by the resolution authorizing the sale of such Parity Obligations, money
sufficient to pay the interest on, principal of, and premium, if any, on the Parity
Obligations as will accrue or otherwise come due or mature, or be subject to mandatory
redemption prior to maturity, on such date and the fees and expenses related to the Parity
Obligations, including the fees and expenses of the Paying Agent and any Registrar,
trustee, remarketing agent, tender agent, or Credit Provider.
(b) Performance. It will faithfully perform at all times any and all covenants,
undertakings, stipulations, and provisions contained in this Resolution, and in each and
every Parity Obligation or evidence thereof.
(c) Redemption. It will duly cause to be called for redemption prior to
maturity, and will cause to be redeemed prior to maturity, all Parity Obligations which by
their terms are mandatorily required to be redeemed prior to maturity, when and as so
required.
(d) Lawful Title. It lawfully owns, has title to, or is lawfully possessed of the
lands, buildings, and facilities now constituting the University, and it will defend said
title and title to any lands, buildings, and facilities which may hereafter become part of
the Financing System, for the benefit of the owners of Parity Obligations against the
claims and demands of all persons whomsoever.
(e) Lawful Authority. It is lawfully qualified to pledge the Pledged Revenues
herein pledged in the manner prescribed herein and has lawfully exercised such right.
(f) Preservation of Lien. Subject to the conditions set forth in Sections 5, 6,
and 7 of this Resolution, it will not do or suffer any act or thing whereby the Financing
System might or could be impaired, and that it will at all times maintain, preserve, and
keep the real and tangible property of the Financing System and every part thereof in
good condition, repair, and working order and operate, maintain, preserve, and keep the
facilities, buildings, structures, and equipment pertaining thereto in good condition,
repair, and working order.
(g) No Additional Encumbrance. It shall not incur additional Debt secured
by the Pledged Revenues in any manner, except as permitted by this Resolution in
connection with Parity Obligations, unless said Debt is made junior and subordinate in all
respects to the liens, pledges, covenants, and agreements of this Resolution.
Notwithstanding anything to the contrary contained herein, and in addition to the right
hereunder to refund the Prior Encumbered Obligations with Parity Obligations, the Board
reserves the right to issue obligations to refund any Prior Encumbered Obligations and to
secure the refunding obligations with the same source or sources securing the Prior
Encumbered Obligations being refunded. Upon the defeasance of the refunded Prior
Encumbered Obligations, the refunding obligations will be Prior Encumbered
Obligations (unless the refunding obligations are made Parity Obligations in accordance
HOU:2993847.1
with the terms of this Resolution and the resolution authorizing their issuance) under this
Resolution for all purposes.
(h) Investments and Security, It will invest and secure money in all accounts
and funds established pursuant to this Resolution in the manner prescribed by law for
such funds, including, but not by way of limitation, the Public Funds Investment Act
(Chapter 2256, Texas Government Code), Chapter 163, Texas Property Code, and
Section 51.003 1, Texas Education Code, and in accordance with written policies
adopted by the Board.
(i) Records. It will keep proper books of record and account in which full,
true, and correct entries will be made of all dealings, activities, and transactions relating
to the University. Each year while Parity Obligations are Outstanding, the Board will
cause to be prepared from such books of record and account an annual financial report of
the University and shall furnish such report to the Authority, to the principal municipal
bond rating agencies, and to any owner of Parity Obligations who shall request same. In
addition, the Board shall submit such financial report and other information required by
law for examination in connection with financial compliance and other audits required to
be conducted by the office of the Auditor of the State of Texas.
(j) Inspection of Books, It will permit the Authority and any owner or
owners of twenty-five percent (25%) or more of the then Outstanding Principal Amount
at all reasonable times to inspect all records, accounts, and data of the Board relating to
the University and the Financing System.
(k) Annual and Direct Obligations. In establishing the annual budget for
each Participant in the Financing System, it shall provide for the satisfaction by each
Participant in the Financing System of its Annual Obligation. The Direct Obligation
shall represent the financial responsibility of each Participant in the Financing System
with respect to Outstanding Parity Obligations. Each such Participant's Direct
Obligation and Annual Obligation shall be evidenced by a financing agreement between
the Board and each Participant.
(1) Determination of Outstanding Parity Obligations. For all purposes of
this Resolution, the judgment of the chief financial officer of the University, presently
the Vice President for Finance and Administration, shall be deemed final in the
determination of which obligations of the Board constitute Parity Obligations; provided,
however, such judgment is subject to confirmation by the Auditor of the State of Texas in
connection with the annual audit of the records of the University.
(m) Execution of Credit Agreements.
(i) For so long as the Authority possesses the exclusive authority to
issue bonds on behalf of the University, should the Board or the Authority
determine that it is in the best interests of the University to obtain a Credit
Agreement to enhance the security for or provide for the payment, redemption, or
remarketing of Parity Obligations, the Authority, upon approval of the Attorney
HOU:2993847.1
General and approval and consent of the Board, may from time to time and at any
time execute and deliver a Credit Agreement to which the Pledged Revenues are
to be pledged. The Authority agrees that it shall use reasonable efforts to
negotiate and deliver, on behalf of the University, a Credit Agreement containing
terms and conditions mutually acceptable to the Authority and the Board;
provided, however, that prior to the Authority adopting any resolution
authorizing the execution and delivery of any such Credit Agreement, it shall
receive from the University an Officer's Certificate to the effect that (i) the Board
has determined that the Participant for whom the Credit Agreement is to be
executed and delivered possesses the financial capability to satisfy its Direct
Obligation after taking into account the payment obligations under the proposed
Credit Agreement, and (ii) to the best of his or her knowledge, the Board is in
compliance with all covenants contained in this Resolution and any resolution
adopted authorizing the issuance of Parity Obligations, and is not in default in the
performance and observance of any of the terms, provisions, and conditions
hereof or thereof
(ii) The Board agrees to provide promptly to the Authority
substantially final versions of all documents pertaining to any "credit agreement"
(as defined in Chapter 1371, Texas Government Code), to which the Pledged
Revenues are to be pledged, proposed to be executed and delivered by the Board
to enhance the security for or provide for the payment, redemption, or
remarketing of the Prior Encumbered Obligations. The Board further agrees that
it shall give written notice to the Authority no later than thirty (30) days prior to
the date the Board considers for approval any resolution authorizing the
execution and delivery of any such credit agreement. The lien on and pledge of
Pledged Revenues to pay the cost of any such credit agreement may be on a
parity with, but not superior to, the lien on and pledge of the Pledged Revenues
securing the Parity Obligations.
Section 5. ISSUANCE OF ADDITIONAL OBLIGATIONS.
(a) Parity Obligations. The Board reserves and shall have the right and
power to issue or incur, or request that the Authority, on its behalf, issue or incur, Parity
Obligations for any purpose authorized by law pursuant to the provisions of this
Resolution and the applicable laws of the State of Texas governing the issuance of bonds
for the benefit of the University. The Board, or the Authority acting on behalf of the
Board, may incur, assume, guarantee, or otherwise become liable in respect of any Parity
Obligations if the Board shall have determined that it will have sufficient funds to meet
the financial obligations of each Participant (currently the University) in the Financing
System, including sufficient Pledged Revenues to satisfy the Annual Debt Service
Requirements of the Financing System and to meet all financial obligations of the Board
relating to the Financing System. In addition, the Board shall not issue or incur Parity
Obligations unless (i) the Board shall determine that the Participant for whom the Parity
Obligations are being issued or incurred possesses the financial capability to satisfy its
Direct Obligation after taking into account the then proposed Parity Obligations, and (ii)
a Designated Financial Officer shall deliver to the Board and the Authority a certificate
HOU:2993847.1
stating that, to the best of his or her knowledge, the Board is in compliance with all
covenants contained in this Resolution and any resolution adopted authorizing the
issuance of Parity Obligations, and is not in default in the performance and observance of
any of the terms, provisions, and conditions hereof or thereof.
(b) Non-Recourse Debt and Subordinated Debt. Non-Recourse Debt and
Subordinated Debt may be incurred by the Board without limitation, subject to the
applicable laws of the State of Texas.
Section 6. DISPOSITION OF ASSETS ATTRIBUTABLE TO FINANCING
SYSTEM PARTICIPANTS. The Board may convey, sell, or otherwise dispose of any
properties of each Participant (currently the University) in the Financing System provided:
(a) Ordinary Course. Such conveyance, sale, or disposition shall be in the
ordinary course of business of such Participant which uses, operates, owns, or is
otherwise responsible for such properties; or
(b) Disposition Upon Board Determination. The Board shall determine that
after the conveyance, sale, or other disposition of such properties, the Board shall have
sufficient funds during each Fiscal Year during which Parity Obligations are to be
Outstanding to meet the financial obligations of each Participant in the Financing
System, including sufficient Pledged Revenues to satisfy the Annual Debt Service
Requirements of the Financing System and to meet all financial obligations of the Board
relating to the Financing System.
Section 7. COMBINATION, DIVISION, RELEASE AND ADMISSION OF
NEW INSTITUTIONS UNDER THE FINANCING SYSTEM.
(a) Combination and Division. Notwithstanding anything to the contrary
contained herein, it is recognized that certain institutions which may become Participants
in the Financing System may be combined or divided and that so long as such combined
or divided institutions continue to be governed by the Board such action shall not be in
violation of the provisions of this Resolution or require any amendments of the
provisions hereof.
(b) Release. Subject to the conditions set forth below, any Participant in the
Financing System or portion thereof may be closed and abandoned by law or may be
removed from the Financing System (thus deleting the revenues, income, funds and
balances attributable to said Participant or portion thereof from Pledged Revenues)
without violating the terms of this Resolution provided:
(i) the Board approves and delivers to the Authority an Officers'
Certificate to the effect that, to the knowledge thereof, after the release of such
Participant or portion thereof, the Board will have sufficient funds during each
Fiscal Year in which Parity Obligations shall thereafter be Outstanding to meet
the financial obligations of the Board, including sufficient Pledged Revenues to
satisfy the Annual Debt Service Requirements of the Financing System and to
meet all financial obligations of the Board relating to the Financing System; and
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(ii) the Board and the Authority receive an Opinion of Counsel which
shall state that such release will not affect the status for federal income tax
purposes of interest on any Outstanding Parity Obligations and that all conditions
precedent provided in this Resolution or any resolution hereafter adopted
governing the issuance of Parity Obligations relating to such release have been
complied with; and
(iii) (A) if the Participant or portion thereof to be released from the
Financing System is to remain under the governance and control of the Board,
the Board must either (i) provide, from lawfully available funds, including
Pledged Revenues attributable to said withdrawing Participant, for the payment
or discharge of said Participant's Direct Obligation or (ii) pledge to the payment
of Parity Obligation, additional resources not then pledged in an amount
sufficient to satisfy such withdrawing Participant's Direct Obligation; or
(B) if the Participant or portion thereof to be released from the
Financing System is to no longer be under the governance and control of
the Board and remains in operation independent of the Board, the Board
must enter into a binding obligation with the new governing body of the
withdrawing institution or the portion thereof being withdrawn,
obligating said governing body to make payments to the Board at the
times and in the amounts equal to said Participant's Annual Obligation or
to pay or discharge said Participant's Direct Obligation, or, in the case of
a portion of a Participant being withdrawn, the proportion of the
Participant's Annual Obligation or Direct Obligation, as the case may be,
attributable to the withdrawing portion of the Participant.
(C) If, after the date of the adoption of this Resolution, the
Board desires for an institution or agency governed by the Board to
become a Participant of the Financing System, or if the Board is required
by law to assume the governance of an institution or agency, it may
include said institution or agency in the Financing System with the effect
set forth in this Resolution by the adoption of a resolution amending this
Resolution, which resolution shall be binding upon the Authority.
Section 8. WAIVER OF CERTAIN COVENANTS. The Board may omit in any
particular instance to comply with any covenant or condition set forth in Sections 3 through 7
hereof if before or after the time for such compliance the Holders of the same percentage in
principal amount of all Parity Obligations then Outstanding, the consent of which would be
required to amend the provisions hereof to permit such noncompliance, shall either waive such
compliance in such instance or generally waive compliance with such covenant or condition, but
no such waiver shall extend to or affect such covenant or condition except to the extent so
expressly waived and, until such waiver shall become effective, the obligations of the Board and
the duties of the Board in respect to any such covenant or condition shall remain in full force and
effect. For purposes of this Section, if a municipal bond insurance policy has been issued
insuring the payment of any Outstanding Parity Obligations, the term Holder shall mean the
company that has issued any such insurance policy or policies.
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Section 9. AMOUNT, PURPOSE, AND DESIGNATION OF THE BONDS. The
Authority's bonds, designated as the "TEXAS PUBLIC FINANCE AUTHORITY STEPHEN
F. A USTIN STA TE UNIVERSITY REVENUE FINANCING SYSTEM REVENUE BONDS,
SERIES " (the "Bonds"), are hereby authorized to be issued and delivered in one or more
series in the maximum aggregate principal amount of $39,100,000 FOR THE PURPOSES OF
(a) ACQUIRING, PURCHASING, CONSTRUCTING, IMPROVING, RENOVATING,
ENLARGING, OR EQUIPPING PROPERTY, BUILDINGS, STRUCTURES, FACILITIES,
ROADS, OR RELATED INFRASTRUCTURE, INCLUDING A FRESHMAN RESIDENCE
HALL AND PARKING GARAGE, (b) REFUNDING THE REFUNDED BONDS AND (c)
PAYING THE COSTS OF ISSUANCE RELATED THERETO. The sale of the Bonds shall be
effected by the Authority pursuant to Section 1232.101 of the TPFA Act, Sections 55.13(c),
Texas Education Code and Chapters 1207 and 1371, Texas Government Code, as amended.
Each series of Bonds herein authorized, unless otherwise indicated, are hereinafter referred to as
the "Bonds." The adoption of this resolution by the Board shall be deemed to be a request by the
Board to the Authority to issue the Bonds for the purposes stated in this Section.
Section 10. DATE, DENOMINATIONS, NUMBERS, DELEGATION TO THE
PRICING COMMITTEE AND USE OF PROCEEDS.
(a) Terms of Bonds. Initially there shall be issued, sold, and delivered
hereunder fully registered bonds, without interest coupons, numbered consecutively from
R-l upward (except the initial Bonds of each series delivered to the Attorney General of
the State of Texas which shall be numbered from T-l upward), payable to the respective
initial registered owners thereof, or to the registered assignee or assignees of said bonds
or any portion or portions thereof (in each case, the "Registered Owner"), in the
denomination of $5,000 or any integral multiple thereof (an "Authorized
Denomination"), maturing not later than May 15, 2030, serially or otherwise on the dates,
in the years and in the principal amounts, respectively, and dated, all as set forth in the
Pricing Certificate of the Pricing Committee. The authority of the Pricing Committee to
execute and deliver a Pricing Certificate for the Bonds shall expire at 5:00 p.m. C.S.T. on
March 4, 2011.
(b) Delegation to Pricing Committee. As authorized by Chapters 1207
and 1371, Government Code, as amended, the Pricing Committee is hereby authorized,
appointed, and designated to act on behalf of the Board in selling and delivering the
Bonds and carrying out the other procedures specified in this Resolution, including
determining and fixing (i) the purpose(s) for which the Bonds are issued, (ii) the date of
the Bonds, (iii) the designation or title and any series or subseries by which such Bonds
shall be known, (iv) the price at which the Bonds will be sold, (v) the years in which the
Bonds will mature, (vi) the principal amount to mature in each of such years, (vii) the
aggregate principal amount of the Bonds, (viii) the rate or rates of interest to be borne by
each maturity and whether the Bonds shall be Tax-Exempt Bonds, Taxable Bonds or
Build America Bonds, (ix) the interest payment periods, (x) the dates, price, and terms
upon and at which the Bonds shall be subject to redemption prior to maturity at the
option of the Board, as well as any mandatory sinking fluid redemption provisions, (xi)
the amount of capitalized interest, if any, for the Bonds (xii) and all other matters relating
to the issuance, sale, and delivery of the Bonds, including whether to procure municipal
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bond insurance, all of which shall be specified in a certificate of the Pricing Committee
delivered to the Secretary to the Board (the "Pricing Certificate"); provided that (i) the
principal amount of the Bonds shall not exceed $39,100,000, (ii) the final maturity date
of the Bonds shall be no later than May 15, 2030, (iii) the price to be paid for the Bonds
shall not be less than 95% of the aggregate original principal amount thereof plus accrued
interest, if any, thereon from its date to its delivery, (iv) the net effective interest rate for
the Bonds shall not be in excess of 6.0%, and (v) if the Bonds are issued for the purpose
described in Section 9(b) of this Resolution, the reftinding of the Refunded Bonds results
in a positive gross debt service savings and a net present value savings of at least one
percent (1.0%) of the principal amount of Refunded Bonds, net of any University
contribution to the refunding.
It is further provided, however, that, notwithstanding the foregoing provisions,
the Bonds shall not be delivered unless prior to delivery of (i) the Pricing Certificate has
been executed and delivered as required by this Resolution and (ii) the Bonds have been
rated by a nationally recognized rating agency for municipal securities in one of the four
highest rating categories for long term obligations, as required by Chapter 1371,
Government Code, as amended.
The Pricing Certificate is hereby incorporated in and made a part of this
Resolution and shall be filed in the minutes of the Board and university as apart of this
Resolution. The Pricing Certificate may be executed by any member of the Pricing
Committee or the Executive Director of the Authority.
(c) Official Statement.
(i) The preliminary official statement and the use thereof in the
solicitation of offers for the purchase of the Bonds is hereby approved and the
preliminary official statement is deemed final as of its date (pursuant to the
Rule).
(ii) The Authority authorizes the preliminary official statement to be:
(1) supplemented to include such additional information and
amendments as may be necessary to confirm the official statement to the
terms of the Bonds and this Resolution; and
(2) modified if, in the opinion of Bond Counsel, such
modification is necessary to satisfy the disclosure requirements of the
applicable federal securities laws.
(iii) Upon the final official statement being modified, if necessary, the
final official statement, as so supplemented and modified, shall be deemed to be
approved by the Authority as the final official statement (for purposes of the
Rule) for the Bonds and an appropriate number of copies shall be delivered to the
Underwriters for use in connection with the officer and sale of the Bonds.
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(d) Disposition of Bond Proceeds. There is hereby created and established a
separate fund designated as the "Stephen F. Austin State University Series 2010 Bond
Proceeds Construction Fund" (the "Construction Fund"). The Construction Fund shall
be held by the University with its depository bank or as otherwise directed by the
University. Within the Construction Fund there shall be established and maintained
accounts designated as the "Accrued Interest Account", the "Cost of Issuance
Account" and the "Project Account", respectively. Moneys deposited in the
Construction Fund shall remain therein until from time to time expended for the purposes
described in this Resolution, and shall not be used for any other purposes whatsoever,
except as otherwise provided below, and pending such expenditure, moneys in the
Construction Fund may be invested at the direction of the Designated Financial Officer
or the designee thereof in eligible investments in accordance with the provisions of
Section 4(h) of this Resolution. Interest earnings shall accrue to the respective accounts
in which moneys are held and invested. The Authority shall cause such proceeds of the
Bonds to be deposited to the credit of the Construction Fund and, to the extent Bonds are
issued for the refunding purposes described in Section 9(b) herein, with the Escrow
Agent as provided in Section 22 herein, in accordance with a letter of instructions which
may be executed on behalf of the Authority by its Executive Director, which letter shall
designate the funds to be deposited to the credit of the Accrued Interest Account, the
Cost of Issuance Account, the Project Account and with the Escrow Agent pursuant to
Section 22 herein; provided, that only moneys representing accrued interest and
premium, if any, received from the proceeds of the Bonds shall be deposited to the credit
of the Accrued Interest Account. The University agrees that it shall pay from the Cost of
Issuance Account those costs of issuance incurred in connection with the issuance and
delivery of the Bonds as are consistent with the approval of the issuance of the Bonds by
the Texas Bond Review Board and are approved in writing by the Authority, acting
through its Executive Director. The University shall cause moneys on deposit in the
Accrued Interest Account to be used to pay debt service on the Bonds as the same shall
become due and payable. The University agrees to expend the moneys in the Project
Account within the Construction Fund on costs incurred in connection with the purposes
described in Section 9 of this Resolution, consistent with the provisions of Subchapter B,
Chapter 55, Texas Education Code. Any amounts remaining in the Project Account
within the Construction Fund after the payment of all costs incurred in connection with
the purposes set out in Section 9 of this Resolution shall be used for the payment of the
principal of and interest on the Bonds as the same shall become due and payable. The
University shall provide to the Authority an Officer's Certificate, the form and substance
of which is described in the memorandum of understanding between the Authority and
the Board detailing the expenditure of bond proceeds from the Construction Fund. The
Authority hereby finds that the deposit of the proceeds from the sale of the Bonds in the
manner outlined above is consistent with the conditions surrounding the issuance of
bonds previously issued directly by the University, and that the procedure outlined above
is adopted in accordance with Section 1232.101 of the TPFA Act.
(e) In General. The Bonds (i) may and shall be redeemed prior to the
respective scheduled maturity dates, (ii) may be assigned and transferred, (iii) may be
exchanged for other Bonds, (iv) shall have the characteristics, and (v) shall be signed and
sealed, and the principal of and interest on the Bonds shall be payable, all as provided,
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and in the manner required or indicated, in the FORM OF BONDS set forth in
Exhibit "B" to this Resolution and as determined by the Pricing Committee as provided
herein, with such changes and additions as are required to be consistent with the terms
and provisions shown in the Pricing Certificate relating to the Bonds.
Section 11. INTEREST. The Bonds shall bear interest calculated on the basis of a
360-day year composed of twelve 30-day months from the dates specified in the Pricing
Certificate to their respective dates of maturity at the rates per annum specified in the Pricing
Certificate.
Section 12. REGISTRATION, TRANSFER, AND EXCHANGE;
AUTHENTICATION; BOOK-ENTRY-ONLY SYSTEM.
(a) Paying Agent/Registrar. , is hereby appointed to act as
the Paying Agent/Registrar for the Bonds. The Designated Financial Officer is
authorized to enter into and carry out a Paying Agent/Registrar Agreement with the
Paying Agent/Registrar with respect to the Bonds, a copy of which is attached to this
Resolution as Exhibit "D".
(b) Registration Books. The Board shall keep or cause to be kept at the
corporate trust office of the Paying Agent/Registrar designated in the Paying
Agent/Registrar Agreement (the "Designated Trust Office") books or records for the
registration of the transfer, exchange, and replacement of the Bonds (the "Registration
Books"), and the Paying Agent/Registrar is hereby appointed to serve as registrar and
transfer agent to keep such books or records and make such registrations of transfers,
exchanges, and replacements under such reasonable regulations as the Board and Paying
Agent/Registrar may prescribe; and the Paying Agent/Registrar shall make such
registrations, transfers, exchanges, and replacements as herein provided. The Paying
Agent/Registrar shall obtain and record in the Registration Books the address of the
registered owner of each Bond to which payments with respect to the Bonds shall be
mailed, as herein provided; but it shall be the duty of each registered owner to notify the
Paying Agent/Registrar in writing of the address to which payments shall be mailed, and
such interest payments shall not be mailed unless such notice has been given. The
Authority and the Board each shall have the right to inspect the Registration Books at the
Designated Trust Office of the Paying Agent/Registrar during regular business hours, but
otherwise the Paying Agent/Registrar shall keep the Registration Books confidential and,
unless otherwise required by law, shall not permit their inspection by any other entity.
(c) Ownership of Bonds. The entity in whose name any Bond shall be
registered in the Registration Books at any time shall be deemed and treated as the
absolute owner thereof for all purposes of this Resolution, whether such Bond shall be
overdue, and, to the extent permitted by law, the Authority, the Board and the Paying
Agent/Registrar shall not be affected by any notice to the contrary; and payment of, or on
account of, the principal of, premium, if any, and interest on any such Bond shall be
made only to such registered owner. All such payments shall be valid and effectual to
satisfy and discharge the liability upon such Bond to the extent of the sum or sums so
paid.
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(d) Payment of Bonds and Interest, The Paying Agent/Registrar shall further
act as the paying agent for paying the principal of, premium, if any, and interest on the
Bonds, all as provided in this Resolution. The Paying Agent/Registrar shall keep proper
records of all payments made by the University and the Paying Agent/Registrar with
respect to the Bonds.
(e) Authentication. The Bonds initially issued and delivered pursuant to this
Resolution shall be authenticated by the Paying Agent/Registrar by execution of the
Paying Agent/Registrar's Authentication Certificate unless they have been approved by
the Attorney General of the State of Texas and registered by the Comptroller of Public
Accounts of the State of Texas, and on each substitute Bond issued in exchange for any
Bond or Bonds issued under this Resolution the Paying Agent/Registrar shall execute the
PAYING AGENT/REGISTRAR'S AUTHENTICATION CERTIFICATE (the
"Authentication Certificate"). The Authentication Certificate shall be in the form set
forth in the FORM OF BONDS.
(f) Transfer, Exchange, or Replacement. Each Bond issued and delivered
pursuant to this Resolution, to the extent of the unpaid or unredeemed principal amount
thereof, may, upon surrender of such Bond at the Designated Trust Office of the Paying
Agent/Registrar, together with a written request therefor duly executed by the registered
owner or the assignee or assignees thereof, or its or their duly authorized attorneys or
representatives, with guarantee of signatures satisfactory to the Paying Agent/Registrar,
may, at the option of the registered owner or such assignee or assignees, as appropriate,
be exchanged for fully registered bonds, without interest coupons, in the appropriate
form prescribed in the FORM OF BONDS set forth in this Resolution, in any Authorized
Denomination (subject to the requirement hereinafter stated that each substitute Bond
shall be of the same series and have a single stated maturity date), as requested in writing
by such registered owner or such assignee or assignees, in an aggregate principal amount
equal to the unpaid or unredeemed principal amount of any Bond or Bonds so
surrendered, and payable to the appropriate registered owner, assignee, or assignees, as
the case may be. If a portion of any Bond shall be redeemed prior to its scheduled
maturity as provided herein, a substitute Bond or Bonds having the same series
designation and maturity date, bearing interest at the same rate, and payable in the same
manner, in Authorized Denominations at the request of the registered owner, and in an
aggregate principal amount equal to the unredeemed portion thereof, will be issued to the
registered owner upon surrender thereof for cancellation. If any Bond or portion thereof
is assigned and transferred, each Bond issued in exchange therefor shall have the same
series designation and maturity date and bear interest at the same rate and payable in the
same manner as the Bond for which it is being exchanged. Each substitute Bond shall
bear a letter and/or number to distinguish it from each other Bond. The Paying
Agent/Registrar shall exchange or replace Bonds as provided herein, and each fully
registered bond delivered in exchange for or replacement of any Bond or portion thereof
as permitted or required by any provision of this Resolution shall constitute one of the
Bonds for all purposes of this Resolution, and may again be exchanged or replaced. On
each substitute Bond issued in exchange for or replacement of any Bond or Bonds issued
under this Resolution there shall be printed an Authentication Certificate, in the form set
forth in the FORM OF BONDS set forth in Exhibit "B" to this Resolution. An
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HOU:2993847.1
authorized representative of the Paying Agent/Registrar shall, before the delivery of any
such Bond, date and manually sign the Authentication Certificate, and, except as
provided in subsection (e) above, no such Bond shall be deemed to be issued or
outstanding unless the Authentication Certificate is so executed. The Paying
Agent/Registrar promptly shall cancel all Bonds surrendered for transfer, exchange, or
replacement. No additional orders or resolutions need be passed or adopted by the Board
or any other body or person so as to accomplish the foregoing transfer, exchange, or
replacement of any Bond or portion thereof, and the Paying Agent/Registrar shall
provide for the printing, execution, and delivery of the substitute Bonds in the manner
prescribed herein, and said Bonds shall be in typed or printed form as determined by the
Pricing Committee. Pursuant to Chapter 1206, Texas Government Code, the duty of
transfer, exchange, or replacement of Bonds as aforesaid is hereby imposed upon the
Paying Agent/Registrar, and, upon the execution of the Authentication Certificate, the
exchanged or replaced Bond shall be valid, incontestable, and enforceable in the same
manner and with the same effect as the Bonds which were originally issued pursuant to
this Resolution. The Board shall pay the Paying Agent/Registrar's standard or customary
fees and charges, if any, for transferring, and exchanging any Bond or any portion
thereof, but the one requesting any such transfer and exchange shall pay any taxes or
governmental charges required to be paid with respect thereto as a condition precedent to
the exercise of such privilege. The Paying Agent/Registrar shall not be required to make
any such transfer, exchange, or replacement of Bonds or any portion thereof (i) during
the period commencing with the close of business on any Record Date and ending with
the opening of business on the next following interest payment date, or, (ii) with respect
to any Bond or portion thereof called for redemption prior to maturity, within 45 days
prior to its redemption date. To the extent possible, any new Bond issued in an
exchange, replacement, or transfer of a Bond will be delivered to the registered owner or
assignee of the registered owner not more than three business days after the receipt of the
Bonds to be cancelled and the written request as described above.
(g) Substitute Paying Agent/Registrar. The Board covenants with the
registered owners of the Bonds that at all times while the Bonds are outstanding the
Board will provide a competent and legally qualified bank, trust company, financial
institution, or other agency to act as and perform the services of Paying Agent/Registrar
for the Bonds under this Resolution, and that the Paying Agent/Registrar will be one
entity. The Board reserves the right to, and may, at its option, change the Paying
Agent/Registrar upon not less than 120 days written notice to the Paying
Agent/Registrar, to be effective not later than 60 days prior to the next principal or
interest payment date after such notice. In the event that the entity at any time acting as
Paying Agent/Registrar (or its successor by merger, acquisition, or other method) should
resign or otherwise cease to act as such, the Board covenants that promptly it will appoint
a competent and legally qualified bank, trust company, financial institution, or other
agency to act as Paying Agent/Registrar under this Resolution. Upon any change in the
Paying Agent/Registrar, the previous Paying Agent/Registrar promptly shall transfer and
deliver the Registration Books (or a copy thereof), along with all other pertinent books
and records relating to the Bonds, to the new Paying Agent/Registrar designated and
appointed by the Board. Upon any change in the Paying Agent/Registrar, the Board
promptly will cause a written notice thereof to be sent by the new Paying Agent/Registrar
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to the Authority and to each registered owner of the Bonds, by United States mail, first-class
postage prepaid, which notice also shall give the address of the new Paying
Agent/Registrar. By accepting the position and performing as such, each Paying
Agent/Registrar shall be deemed to have agreed to the provisions of this Resolution, and
a certified copy of this Resolution shall be delivered to each Paying Agent/Registrar.
(h) Book-Entry-Only System. The Bonds issued in exchange for the Bonds
initially issued and delivered to the Purchaser shall be issued in the form of a separate
single fully registered Bond for each of the maturities thereof registered in the name of
Cede & Co., as nominee of DTC, and except as provided in subsection (i) hereof, all of
the Outstanding Bonds shall be registered in the name of Cede & Co., as nominee of
DTC. The Authority heretofore has executed a "DTC Blanket Letter of Representations"
in connection with utilizing the DTC Book-Entry-Only System.
With respect to Bonds registered in the name of Cede & Co., as nominee of DTC,
the Authority, the Board and the Paying Agent/Registrar shall have no responsibility or
obligation to any DTC Participant or to any person on behalf of whom such a DTC
Participant holds an interest in the Bonds. Without limiting the immediately preceding
sentence, the Authority, the Board and the Paying Agent/Registrar shall have no
responsibility or obligation with respect to (i) the accuracy of the records of DTC, Cede
& Co. or any DTC Participant with respect to any ownership interest in the Bonds, (ii)
the delivery to any DTC Participant or any other person, other than a Bondholder, as
shown on the Registration Books, of any notice with respect to the Bonds, including any
notice of redemption, or (iii) the payment to any DTC Participant or any other person,
other than a Bondholder, as shown in the Registration Books of any amount with respect
to principal of, premium, if any, or interest on the Bonds. Notwithstanding any other
provision of this Resolution to the contrary but to the extent permitted by law, the
Authority, the Board and the Paying Agent/Registrar shall be entitled to treat and
consider the person in whose name each Bond is registered in the Registration Books as
the absolute owner of such Bond for the purpose of payment of principal, premium, if
any, and interest, with respect to such Bond, for the purposes of registering transfers with
respect to such Bond, and for all other purposes of registering transfers with respect to
such Bonds, and for all other purposes whatsoever. The Paying Agent/Registrar shall
pay all principal of, premium, if any, and interest on the Bonds only to or upon the order
of the respective owners, as shown in the Registration Books as provided in this
Resolution, or their respective attorneys duly authorized in writing, and all such
payments shall be valid and effective to fully satisfy and discharge the Board's
obligations with respect to payment of principal of, premium, if any, and interest on the
Bonds to the extent of the. sum or suns so paid. No person other than an owner, as
shown in the Registration Books, shall receive a Bond certificate evidencing the
obligation of the Board to make payments of principal, premium, if any, and interest
pursuant to this Resolution. Upon delivery by DTC to the Paying Agent/Registrar of
written notice to the effect that DTC has determined to substitute a new nominee in place
of Cede & Co., and subject to the provisions in this Resolution with respect to interest
checks being mailed to the registered owner at the close of business on the Record Date,
the word "Cede & Co." in this Resolution shall refer to such new nominee of DTC.
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(i) Successor Securities Depository; Transfers Outside Book-Entry-Only
System. In the event that the Board or the Paying Agent/Registrar determines that DTC
is incapable of discharging its responsibilities described herein and in the representation
letter of the Board to DTC (as referred in subsection (h) above) or DTC determines to
discontinue providing its services with respect to the Bonds, the Board shall (i) appoint a
successor securities depository, qualified to act as such under Section 17(a) of the
Securities and Exchange Act of 1934, as amended, notify DTC and DTC Participants of
the appointment of such successor securities depository and transfer one or more separate
Bonds to such successor securities depository or (ii) notify DTC and DTC Participants of
the availability through DTC of Bonds and transfer one or more separate Bonds to DTC
Participants having Bonds credited to their DTC accounts. In such event, the Bonds shall
no longer be restricted to being registered in the Registration Books in the name of Cede
& Co., as nominee of DTC, but may be registered in the name of the successor securities
depository, or its nominee, or in whatever name or names Bondholders transferring or
exchanging Bonds shall designate, in accordance with the provisions of this Resolution.
(j) Payments to Cede & Co. Notwithstanding any other provision of this
Resolution to the contrary, so long as any Bond is registered in the name of Cede & Co.,
as nominee of DTC, all payments with respect to principal of, premium, if any, and
interest on such Bond and all notices with respect to such Bond shall be made and given,
respectively, in the manner provided in the representation letter of the Board to DTC.
(k) Notice of Redemption. In addition to the method of providing a notice of
redemption set forth in the FORM OF BONDS, the Paying Agent/Registrar shall give
notice of redemption of Bonds by United States mail, first-class postage prepaid, at least
thirty (30) days prior to a redemption date to each registered securities depository and to
any national information service that disseminates redemption notices. In addition, in the
event of a redemption caused by an advance refunding of the Bonds, the Paying
Agent/Registrar shall send a second notice of redemption to the persons specified in the
immediately preceding sentence at least thirty (30) days but not more than ninety (90)
days prior to the actual redemption date. Any notice sent to the registered securities
depositories or such national information services shall be sent so that they are received
at least two (2) days prior to the general mailing or publication date of such notice, The
Paying Agent/Registrar shall also send a notice of prepayment or redemption to the
registered owner of any Bond who has not sent the Bonds in for redemption sixty (60)
days after the redemption date.
Each notice of redemption, whether required in the FORM OF BONDS or in this
Section, shall contain a description of the Bonds to be redeemed including the complete
name of the Bonds, the Series, the date of issue, the interest rate, the maturity date, the
CUSIP number, a reference to the principal amounts of each maturity called for
redemption, the publication and mailing date for the notice, the date of redemption, the
redemption price, the name of the Paying Agent/Registrar and the address at which the
Bonds may be redeemed, including a contact person and telephone number.
With respect to any optional redemption of the Bonds, unless all prerequisites to
such redemption required by this Resolution and the Pricing Certificate have been met,
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HOU:2993847.1
including moneys sufficient to pay the principal of and premium, if any, and interest on
the Bonds to be redeemed having been received by the Paying Agent/Registrar prior to
the giving of notice of such redemption, such notice shall state that said redemption may,
at the option of the Authority, by conditional upon the satisfaction of all prerequisites and
receipt of such moneys by the Paying Agent/Registrar on or prior to the date fixed for
such redemption, and if such prerequisites to the redemption and sufficient moneys are
not received, such notice shall be of no force and effect, the Authority shall not redeem
such Bonds and the Paying Agent/Registrar shall give notice, in the manner in which the
notice of redemption was given, to the effect that the Bonds have not been redeemed.
All redemption payments made by the Paying Agent/Registrar to the registered
owners of the Bonds shall include a CUSIP number relating to each amount paid to such
registered owner.
Section 13. FORM OF BONDS. The forms of the Bonds, including the form of the
Authentication Certificate, the form of Assignment, the form of any statement of insurance with
respect to the Bonds provided by the Insurer (as such term is defined in Section 34 of this
Resolution), and the form of Registration Certificate of the Comptroller of Public Accounts of
the State of Texas, with respect to the Bonds initially issued and delivered to the Purchaser
pursuant to this Resolution, shall be, respectively, substantially as set forth in Exhibit "B". with
such appropriate variations, omissions, or insertions as are permitted or required by this
Resolution.
Section 14. INDIVIDUALS NOT LIABLE. All covenants, stipulations, obligations,
and agreements of the Board contained in this Resolution shall be deemed to be covenants,
stipulations, obligations, and agreements of the Financing System and the Board to the full extent
authorized or permitted by the Constitution and laws of the State of Texas. The Authority agrees
that all covenants, stipulations, obligations, and agreements of the Board contained in this
Resolution shall apply equally to the Authority acting in its capacity as the issuer of the Bonds
on behalf of the University. No covenant, stipulation, obligation, or agreement herein contained
shall be deemed to be a covenant; stipulation, obligation, or agreement of any member of either
the Authority or the Board or agent or employee of either the Authority or the Board in the
individual capacity thereof and neither the respective members of the Authority or the Board, nor
any officer thereof or of any participant shall be liable personally on Parity Obligations when
issued, or be subject to any personal liability or accountability by reason of the issuance thereof.
Section 15. SECURITY FOR THE BONDS. The Bonds are special obligations of
the Board payable from and secured solely by the Pledged Revenues pursuant to this Resolution.
The Pledged Revenues are hereby pledged, subject to the liens securing the Prior Encumbered
Obligations, to the payment of the principal of, premium, if any, and interest on the Bonds as the
same shall become due and payable. The Board agrees to pay the principal of, premium, if any,
and the interest on the Bonds when due, whether by reason of maturity or redemption.
Section 16. PAYMENTS. Semiannually on or before each principal or interest
payment date while any of the Bonds are outstanding and unpaid, commencing on the first
interest payment date for the Bonds as specified in the Pricing Certificate, the Board shall make
available to the Paying Agent/Registrar, money sufficient to pay such interest on and such
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principal of the Bonds as will accrue or mature, or be subject to mandatory redemption prior to
maturity, on such principal, redemption, or interest payment date. The Paying Agent/Registrar
shall cancel all paid Bonds and shall furnish the Board with an appropriate certificate of
cancellation.
Section 17. DAMAGED, MUTILATED, LOST, STOLEN, OR DESTROYED
BONDS.
(a) Replacement Bonds. In the event any outstanding Bond is damaged,
mutilated, lost, stolen, or destroyed, the Paying Agent/Registrar shall cause to be printed,
executed, and delivered, a new bond of the same Series, principal amount, maturity, and
interest rate, and in the same form, as the damaged, mutilated, lost, stolen, or destroyed
Bond, in replacement for such Bond in the manner hereinafter provided.
(b) Application for Replacement Bonds. Application for replacement of
damaged, mutilated, lost, stolen, or destroyed Bonds shall be made to the Paying
Agent/Registrar In every case of loss, theft, or destruction of a Bond, the applicant for a
replacement bond shall furnish to the Authority, the Board and the Paying
Agent/Registrar such security or indemnity as may be required by them to save each of
them harmless from any loss or damage with respect thereto. Also, in every case of loss,
theft, or destruction of a Bond, the applicant shall furnish to the Authority, the Board and
the Paying Agent/Registrar evidence to their satisfaction of the loss, theft, or destruction
of such Bond, as the case may be. In every case of damage or mutilation of a Bond, the
applicant shall surrender to the Paying Agent/Registrar for cancellation the Bond so
damaged or mutilated.
(c) Payment in Lieu of Replacement. Notwithstanding the foregoing
provisions of this Section, in the event any such Bond shall have matured, and no default
has occurred which is then continuing in the payment of the principal of, redemption
premium, if any, or interest on the Bond, the Board, or the Authority acting on behalf of
the Board, may authorize the payment of the same (without surrender thereof except in
the case of a damaged or mutilated Bond) instead of issuing a replacement Bond,
provided security or indemnity is furnished as above provided in this Section.
(d) Charge for Issuing Replacement Bonds. Prior to the issuance of any
replacement bond, the Paying Agent/Registrar shall charge the owner of such Bond with
all legal, printing, and other expenses in connection therewith. Every replacement bond
issued pursuant to the provisions of this Section by virtue of the fact that any Bond is
lost, stolen, or destroyed shall constitute a contractual obligation of the Board whether or
not the lost, stolen, or destroyed Bond shall be found at any time, or be enforceable by
anyone, and shall be entitled to all the benefits of this Resolution equally and
proportionately with any and all other Bonds duly issued under this Resolution.
(e) Authority for Issuing Replacement Bonds. In accordance with
Chapter 1206, Texas Government Code, this Section shall constitute authority for the
issuance of any such replacement bond without the necessity of further action by the
Authority, the Board or any other body or person, and the duty of the replacement of such
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Bonds is hereby authorized and imposed upon the Paying Agent/Registrar, and the
Paying Agent/Registrar shall authenticate and deliver such Bonds in the form and manner
and with the effect, as provided in Section 12(f) of this Resolution for Bonds issued in
exchange and replacement for other Bonds.
Section 18. REMEDIES. Any owner of Parity Obligations in the event of default in
connection with any covenant contained herein or in any resolution adopted hereafter authorizing
the issuance of Parity Obligations, or default in the payment of said obligations, or of any interest
due thereon, or other costs and expenses related thereto, may require the Authority, the Board,
their respective officials and employees, and any appropriate official of the State of Texas, to
carry out, respect, or enforce the covenants and obligations of this Resolution by all legal and
equitable means, including specifically, but without limitation, the use and filing of mandamus
proceedings in any court of competent jurisdiction against the Authority, the Board, their
respective officials and employees, or any appropriate official of the State of Texas.
Section 19. DEFEASANCE OF OBLIGATIONS.
(a) Any Bond and the interest thereon shall be deemed to be paid, retired and
no longer Outstanding (a "Defeased Bond") within the meaning of this Resolution,
except to the extent provided in subsections (c) and (e) of this Section, when payment of
the principal of such Bond, plus interest thereon to the due date or dates (whether such
due date or dates be by reason of maturity, upon redemption, or otherwise) either (i) shall
have been made or caused to be made in accordance with the terms thereof (including the
giving of any required notice of redemption) or (ii) shall have been provided for on or
before such due date by irrevocably depositing with or making available to the Paying
Agent/Registrar for such payment (1) lawful money of the United States of America
sufficient to make such payment, (2) Defeasance Securities, certified by an independent
public accounting firm of national reputation to mature as to principal and interest in such
amounts and at such times as will ensure the availability, without reinvestment, of
sufficient money to provide for such payment and when proper arrangements have been
made by the Authority with the Paying Agent/Registrar for the payment of its services
until all Defeased Bonds shall have become due and payable or (3) any combination of
(1) and (2). At such time as a Bond shall be deemed to be a Defeased Bond hereunder, as
aforesaid, such Bond and the interest thereon shall no longer be secured by, payable
from, or entitled to the benefits of, the revenues herein pledged as provided in this
Resolution, and such principal and interest shall be payable solely from such money or
Defeasance Securities.
(b) The deposit under clause (ii) of subsection (a) shall be deemed a payment
of a Bond as aforesaid when proper notice of redemption of such Bonds shall have been
given, in accordance with this Resolution. Any money so deposited with the Paying
Agent/Registrar as provided in this Section may at the written discretion of the Authority
also be invested in Defeasance Securities, maturing in the amounts and at the times as
hereinbefore set forth, and all income from all Defeasance Securities in possession of the
Paying Agent/Registrar pursuant to this Section which is not required for the payment of
such Bond and premium, if any, and interest thereon with respect to which such money
has been so deposited, shall be turned over to the Authority.
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(c) Notwithstanding any provision of any other Section of this Resolution
which may be contrary to the provisions of this Section, all money or Defeasance
Securities set aside and held in trust pursuant to the provisions of this Section for the
payment of principal of the Bonds and premium, if any, and interest thereon, shall be
applied to and used solely for the payment of the particular Bonds and premium, if any,
and interest thereon, with respect to which such money or Defeasance Securities have
been so set aside in trust. Until all Defeased Bonds shall have become due and payable,
the Paying Agent/Registrar shall perform the services of Paying Agent/Registrar for such
Defeased Bonds the same as if they had not been defeased, and the Authority shall make
proper arrangements to provide and pay for such services as required by this Resolution.
(d) Notwithstanding anything elsewhere in this Resolution, if money or
Defeasance Securities have been deposited or set aside with the Paying Agent/Registrar
pursuant to this Section for the payment of Bonds and such Bonds shall not have in fact
been actually paid in full, no amendment of the provisions of this Section shall be made
without the consent of the registered owner of each Bond affected thereby.
(e) Notwithstanding the provisions of subsection (a) immediately above, to
the extent that, upon the defeasance of any Defeased Bond to be paid at its maturity, the
Authority retains the right under Texas law to later call that Defeased Bond for
redemption in accordance with the provisions of the resolution authorizing its issuance,
the Authority may call such Defeased Bond for redemption upon complying with the
provisions of Texas law and upon the satisfaction of the provisions of subsection (a)
immediately above with respect to such Defeased Bond as though it was being defeased
at the time of the exercise of the option to redeem the Defeased Bond and the effect of the
redemption is taken into account in determining the sufficiency of the provisions made
for the payment of the Defeased Bond.
(f) In the event that the Authority elects to defease less than all of the
principal amount of Bonds of a maturity, the Paying Agent/Registrar shall select, or cause
to be selected, such amount of Bonds by such random method as it deems fair and
appropriate.
Section 20. AMENDMENT OF RESOLUTION.
(a) Amendment Without Consent, This Resolution and the rights and
obligations of the Authority, the Board and of the owners of the Outstanding Parity
Obligations may be modified or amended at any time without notice to or the consent of
any owner of the Outstanding Parity Obligations, solely for any one or more of the
following purposes:
(i) To add to the covenants and agreements of the Board or the
Authority contained in this Resolution, other covenants and agreements thereafter
to be observed, or to surrender any right or power reserved to or conferred upon
the Board or the Authority in this Resolution;
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(ii) To cure any ambiguity or inconsistency, or to cure or correct any
defective provisions contained in this Resolution, upon receipt by the Board and
the Authority of an opinion of Bond Counsel, that the same is needed for such
purpose, and will more clearly express the intent of this Resolution;
(iii) To supplement the security for the Parity Obligations, including,
but not by way of limitation, to provide for the addition of new institutions and
agencies to the Financing System or to clarify the provisions regarding the
University as a Participant in the Financing System; provided, however, if the
definition of Pledged Revenues is amended in any manner which results in the
pledge of additional resources, the terms of such amendment may limit the
amount of such additional pledge and the manner, extent, and duration of such
additional pledge all as set forth in such amendment;
(iv) To make any changes or amendments requested by any bond rating
agency then rating or requested to rate Parity Obligations, as a condition to the
issuance or maintenance of a rating, which changes or amendments do not, in the
judgment of the Board and the Authority, materially adversely affect the interests
of the owners of the Outstanding Parity Obligations;
(v) To make such changes, modifications or amendments as may be
necessary or desirable, which shall not adversely affect the interests of the
owners of the Outstanding Parity Obligations, in order, to the extent permitted by
law, to facilitate the economic and practical utilization of Credit Agreements with
respect to the Parity Obligations;
(vi) To make such other changes in the provisions hereof as the Board
and the Authority may deem necessary or desirable and which shall not, in the
judgment of the Board and the Authority, materially adversely affect the interests
of the owners of Outstanding Parity Obligations; or
(vii) To make such changes or amendments as contemplated by
Section 24(c)(v) of this Resolution in order to comply with the Rule.
Notice of any such amendment may be published by the Board in the manner described
in subsection (c) of this Section; provided, however, that the publication of such notice
shall not constitute a condition precedent to the adoption of such amendatory resolution
and the failure to publish such notice shall not adversely affect the implementation of
such amendment as adopted pursuant to such amendatory resolution.
(b) Amendments With Consent. Subject to the other provisions of this
Resolution, the owners of Outstanding Parity Obligations aggregating a majority in
Outstanding Principal Amount shall have the right from time to time to approve any
amendment to this Resolution, other than amendments described in subsection (a) of this
Section, which may be deemed necessary or desirable by the Board and the Authority;
provided, however, that nothing herein contained shall permit or be construed to permit,
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without the approval of the owners of all of the Outstanding Parity Obligations, the
amendment of the terms and conditions in this Resolution so as to:
(i) Grant to the owners of any Outstanding Parity Obligations a
priority over the owners of any other Outstanding Parity Obligations;
(ii) Materially adversely affect the rights of the owners of less than all
Parity Obligations then Outstanding;
(iii) Change the minimum percentage of the Outstanding Principal
Amount necessary for consent to such amendment;
(iv) Make any change in the maturity of the Outstanding Bonds;
(v) Reduce the rate of interest borne by outstanding Bonds;
(vi) Reduce the amount of the principal payable on Outstanding Bonds;
or
(vii) Modify the temps of payment of principal of or interest on the
Outstanding Bonds, or impose any conditions with respect to such payment.
(c) Notice. If at any time this Resolution is to be amended pursuant to the
provisions of subsection (b) of this Section, the Board shall cause notice of the proposed
amendment to be published in a financial newspaper or journal of general circulation in
The City of New York, New York, once during each calendar week for at least two
successive calendar weeks. Such notice shall briefly set forth the nature of the proposed
amendment and shall state that a copy thereof is on file at the principal office of each
Registrar for the Parity Obligations for inspection by all owners of Parity Obligations.
Such publication is not required, however, if the Board gives or causes to be given such
notice in writing, by certified mail, to each owner of Parity Obligations. Such
publication is not required with respect to amendments to this Resolution effected
pursuant to the provisions of subsection (a) of this Section.
(d) Receipt of Consents. Whenever at any time not less than thirty (30) days,
and within one year, from the date of the first publication of said notice or other service
of written notice of the proposed amendment the Board shall receive an instrument or
instruments executed by all of the owners or the owners of at least a majority in
Outstanding Principal Amount, as appropriate, which instrument or instruments shall
refer to the proposed amendment described in said notice and which specifically consent
to and approve such amendment in substantially the form of the copy thereof on file as
aforesaid, the Board may adopt the amendatory resolution in substantially the same form.
(e) Effect of Amendments. Upon the adoption of any resolution to amend
this Resolution pursuant to the provisions of this Section, this Resolution shall be
deemed to be amended in accordance with the amendatory resolution, and the respective
rights, duties, and obligations of the Board, the Authority and all the owners of then
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Outstanding Parity Obligations and all future Parity Obligations shall thereafter be
determined, exercised, and enforced under this Resolution, as amended.
(f) Consent Irrevocable. Any consent given by any owner of Parity
Obligations pursuant to the provisions of this Section shall be irrevocable for a period of
six months from the date of the first publication or other service of the notice provided
for in this Section, and shall be conclusive and binding upon all future owners of the
same Parity Obligations during such period. Such consent may be revoked at any time
after six months from the date of the first publication of such notice by the owner who
gave such consent, or by a successor in title, by filing notice thereof with the Registrar
for such Parity Obligations, the Authority and the Board, but such revocation shall not be
effective if the owners of a majority in Outstanding Principal Amount, prior to the
attempted revocation, consented to and approved the amendment.
(g) Ownership. For the purpose of this Section, the ownership and other
matters relating to all Parity Obligations shall be determined by the Registration Books
maintained by the Registrar.
Section 21. COVENANTS REGARDING TAX-EXEMPTION.
(a) Covenants. The Board covenants to take any action necessary to assure,
or refrain from any action which would adversely affect, the treatment of the Bonds as
obligations described in section 103 of the Code, the interest on which is not includable
in the "gross income" of the holder for purposes of federal income taxation. The
Authority understands, and the Board agrees, that all costs associated with satisfying the
below covenants including, but not by way of limitation, the costs incurred in respect to
compliance with clause (8) below, shall be borne by the Board. In furtherance thereof,
the Board covenants as follows:
(1) to take any action to assure that no more than 10 percent of the
proceeds of the Bonds or the Refunded Bonds or the projects financed therewith
(less amounts deposited to a reserve fund, if any) are used for any "private
business use," as defined in section 141(b)(6) of the Code or, if more than 10
percent of the proceeds or the projects financed therewith are so used, such
amounts, whether or not received by the Board, with respect to such private
business use, do not, under the terms of this Resolution or any underlying
arrangement, directly or indirectly, secure or provide for the payment of more
than 10 percent of the debt service on the Bonds, in contravention of
section 141(b)(2) of the Code;
(2) to take any action to assure that in the event that the "private
business use" described in subsection (1) hereof exceeds 5 percent of the proceeds
of the Bonds or the Refunded Bonds or the projects financed therewith (less
amounts deposited into a reserve fund, if any) then the amount in excess of 5
percent is used for a "private business use" which is "related" and not
"disproportionate," within the meaning of section 141(b)(3) of the Code, to the
governmental use;
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(3) to take any action to assure that no amount which is greater than
the lesser of $5,000,000, or 5 percent of the proceeds of the Bonds (less amounts
deposited into a reserve fund, if any) is directly or indirectly used to finance loans
to persons, other than state or local governmental units, in contravention of
section 141 (c) of the Code;
(4) to refrain from taking any action which would otherwise result in
the Bonds being treated as "private activity bonds" within the meaning of
section 141 (b) of the Code;
(5) to refrain from taking any action that would result in the Bonds
being "federally guaranteed" within the meaning of section 149(b) of the Code;
(6) to refrain from using any portion of the proceeds of the Bonds,
directly or indirectly, to acquire or to replace funds which were used, directly or
indirectly, to acquire investment property (as defined in section 148(b)(2) of the
Code) which produces a materially higher yield over the term of the Bonds, other
than investment property acquired with - -
(A) proceeds of the Bonds invest

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Stephen F. Austin State University Minutes of the Board of Regents Nacogdoches, Texas February 26,2010 Meeting 258 TABLE OF CONTENTS BOARD MINUTES FOR FEBRUARY 26,2010 MEETING 258 Page Board Order 10-19 Approval of Changes to Licensing Agreement for Biotechnology Research with Quest Biologicals, LLC .2 Board Order 10-20 Approval of Resolution Authorizing the Refunding of the Outstanding SFA 1998 Tuition Revenue Bond Issue and Sale of the Texas Public Finance Authority Stephen F. Austin State University Revenue Financing System Revenue Refunding Bonds 2 Board Order 10-21 Designated Tuition Increase for 2010-2011 3 Board Order 10-22 Course Fees and Lab Fees for 2010-2011 3 Board Order 10-23 FY2011 Room and Board Rates 3 Appendices Appendix 1 - Amended & Restated License Agreement between Stephen F. Austin State University and Quest Biologicals, LLC Appendix 2 - Resolution Authorizing the Refunding of the Outstanding SFA 1998 Tuition Revenue Bond Issue and Sale of the Texas Public Finance Authority Stephen F. Austin State University Revenue Financing System Revenue Refunding Bonds Appendix 3 - Proposed Course Fees and Lab Fees for FY2011 Appendix 4 - Room and Board Rates for FY2011 Stephen F. Austin State University Minutes of the Meeting of the Board of Regents Nacogdoches, Texas February 26,2010 Austin Building 307 Meeting 258 A special called meeting of the Board of Regents was called to order in open session at 2:00 p.m., Friday, February 26, 2010, by Chair James Thompson. PRESENT: Board Members: Mr. James Thompson, Chair Mr. Carlos Amaral Mr. Richard Boyer Dr. Scott Coleman Mr. James Dickerson Ms. Valerie Ertz Mr. Steve McCarty Ms. Morgan Tomberlain Mr. Melvin White President: Dr. Baker Pattillo Vice-Presidents: Dr. Richard Berry Mr. Danny Gallant Mr. Steve Westbrook Staff Attorney: Mr. Damon Derrick Other SFA administrators, staff, and visitors Regent Bob Garrett was unable to attend because of a death in his family. The chair called for an executive session at 2:05 p.m. to consider the following item: Consultation with Attorney Regarding Legal Advice (Texas Government Code, Section 551.071) The executive session ended at 2:10 p.m. The Finance Audit Committee convened at 2:10p.m. and adjourned at 2:30p.m. -1- The board reconvened as a committee of the whole in open session at 2:30 p.m. and considered the following financial affairs recommendations from the Finance Audit Committee: Board Order 10-19 Upon motion by Regent Dickerson, seconded by Regent White, with all members voting aye, the following item was approved: CONSIDERATION OF CHANGES TO LICENSE AGREEMENT FOR BIOTECHNOLOGY RESEARCH WITH QUEST BIOLOGICALS, LLC Whereas, the board considered the following: The university entered into a license agreement effective October 24, 2002 granting an exclusive license to manufacture, have manufactured, sell or otherwise commercialize intellectual property developed in part by Dr. Bea Clack, Associate Professor of Biotechnology. This license agreement has become antiquated and requires revisiting in order to assist the licensee in its efforts to assign the agreement upon university consent. The university's Intellectual Property Policy states: "Agreements which grant a third party the right to make, use, or sell a patented invention, invention know-how, or trade secret that has been disclosed and assigned to, or is otherwise owned by, the university shall require approval by the Board of Regents." Therefore, is was ordered that the president was authorized to sign any contracts or agreements amending or superseding the above mentioned licensing agreement and any subsequent assignment, as reviewed and approved by the Office of the General Counsel, and attached as Appendix 1. Board Order 10-20 Upon motion by Regent Amaral, seconded by Regent Ertz, with all members voting aye, the following item was approved: CONSIDERATION OF RESOLUTION AUTHORIZING THE REFUNDING OF THE OUTSTANDING SFA 1998 TUITION REVENUE BOND ISSUE AND SALE OF THE TEXAS PUBLIC FINANCE AUTHORITY STEPHEN F. AUSTIN STATE UNIVERSITY REVENUE FINANCING SYSTEM REVENUE REFUNDING BONDS Whereas, the board considered the following: Stephen F. Austin State University is in the process of issuing $35 million of revenue bonds to finance the construction of the Freshman Residence Hall/Success Center and parking garage. In association with that issue, current market conditions provide the opportunity to refund its outstanding 1998 tuition revenue bonds. If favorable market conditions prevail, refunding can save the state of Texas debt service costs for the remaining life of the 1998 tuition revenue bond issue. The resolution in Appendix 2 authorizes the refunding of the outstanding 1998 tuition revenue bonds and sale of the Texas Public Authority Stephen F. Austin State University Revenue Financing System Revenue Refunding Bonds. -2- Therefore, it was ordered that the resolution was approved as presented in Appendix 2, authorizing the refunding of the outstanding 1998 tuition revenue bond issue and sale of the Texas Public Finance Authority Stephen F. Austin State University Revenue Financing System Revenue Refunding Bonds. Board Order 10-21 Upon motion by Regent Ertz, seconded by Regent White, with Regents Coleman, Dickerson, Ertz, McCarty, and White voting aye, Regents Amaral and Boyer voting nay, the following item was approved: DESIGNATED TUITION INCREASE FOR 2010-2011 Whereas, the board considered the following: Stephen F. Austin State University currently assesses $111 per semester credit hour in designated tuition. Designated tuition costs to a student do not increase beyond a 16 semester credit load. Therefore, it was ordered that designated tuition be increased to $119.85 per semester credit hour for fiscal year 2010-2011. Board Order 10-22 Upon motion by Regent Ertz, seconded by Regent White, with Regents Boyer, Coleman, Dickerson, Ertz, McCarty, and White voting aye, Regent Amaral voting nay, the following item was approved: COURSE FEES AND LAB FEES FOR 2010-2011 Whereas, the board considered the following: Course and lab fees provide instructional departments with funds to support the actual cost of consumable supplies, service, and travel related to specific courses. Course and lab fees are allocated to instructional departments for expenditures related to course delivery. Therefore, it was ordered that the schedule of course fees and lab fees for the 2010- 2011 fiscal year shown in Appendix 3 was adopted. This fee schedule will begin with the fall 2010 semester. Board Order 10-23 Upon motion by Regent Ertz, seconded by Regent Amaral, with all regents voting aye, the following item was approved: FY2011 ROOM AND BOARD RATES Whereas, the board considered the following: Projected housing and food service operating costs support the need to increase the room and board rates for the 2010 - 2011 academic year. -3- Pursuant to the provisions within the food service contract, the administration and ARAMARK have negotiated a rate increase of 2.85% for the provision of board plan food service during the 2011 fiscal year. The university contract uses the percentage increase in the Food and Beverage element of the Consumer Price Index published by the Bureau of Labor Statistics, U.S. Department of Labor, for urban consumers ("CPI-U") in the South as a benchmark for the rate increase considered. This CPI element was 3.6% for the past 12 months; however university negotiations yielded the smaller increase. The proposed room and board rates for FY2011 are presented in Appendix 4. The average increase in proposed room rates is 5% while the proposed increase in meal plan rates is 3.35%. The revised rates will become effective in the fall semester of 2010. Therefore, it was ordered that the negotiated 2.85% ARAMARK increase and the proposed room and board rates for FY2011 in accordance with the schedule presented in Appendix 4 were approved. The meeting was adjourned at 2:48 p.m. -4- Appendix 1 AMENDED & RESTATED LICENSE AGREEMENT This Amended & Restated License Agreement ("Agreement") is between the Stephen F. Austin State University ("University"), an agency entity of the State of Texas with its principal administrative office in Nacogdoches, Texas, and Quest Biologicals, LLC. (formerly Quest Biologicals, Ltd.), a Texas Limited Liability Company, having its principal administrative office located at 1214 Williamsburg, Nacogdoches, Texas ("Licensee"). Certain capitalized terms used herein are defined in Section 2 hereof. Recitals A. University owns certain Technology Rights related to the Licensed Subject Matter, which have been developed at the University pursuant to that certain Stephen F. Austin State University Educational Research Agreement and a Second Extension of such Research Agreement {hereinafter the Research Agreement and the Second Extension shall be collectively referred to as the "Research Agreement") between the parties hereto originally effective September 1,2000. B. The parties desire to have the Licensed Subject Matter further developed and used for the benefit of Licensee and the University, and simultaneously with the execution of this Agreement by the parties, Licensee and University have entered into a Second Extension of Educational Research Agreement extending and supplementing the above Research Agreement under which Licensee will continue to fund further research and development by the University of the Licensed Subject Matter as provided therein. Licensee and University entered into a License Agreement ("License Agreement") effective October 24, 2002 to provide certain rights and benefits to Licensee for the practice of the licensed subject matter, with particular regards to a Biotin based product. C. The parties desire that License Agreement be amended and restated to further define and clarify the relationship and duties between the parties, and to assist Licensee in any subsequent assignment upon University consent. Licensee obtain a license from University to practice the Licensed Subject Matter. Terms and Conditions NOW, THEREFORE, in consideration of the mutual covenants and promises herein contained, the parties agree as follows: 1. Effective Date This Agreement is effective October 2